Adjusting entries are necessary to update the Chart of Accounts before preparing Financial Statements.

Name: Adjusting entries are necessary to update the Chart of Accounts before preparing Financial Statements.
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Adjusting entries are necessary to ensure that the revenue recognition and matching principles are followed, not specifically to update the Chart of Accounts. They are made in the general ledger accounts to record revenues and expenses in the period they occur, not to update the chart itself.

Adjusting Entries Are Necessary to Update the Chart of Accounts