Why are adjusting entries required before closing the books -
A)to record previously unrecorded purchases
B)to record previously unrecorded sales
C)to adjust all ledger accounts to their correct values at year end
D)to record previously incorrect entries

Question

Quizplus · Accepted Answer

Adjusting entries are necessary to ensure that all ledger accounts are accurate and up-to-date at the end of the accounting period. This includes adjusting for accrued expenses or revenues, prepayments, depreciation, and other items that may not have been recorded properly during the period. By making these adjustments, the financial statements will reflect the true financial position and performance of the company. A and B are not entirely correct, as adjusting entries are not just to record previously unrecorded transactions, and D is not comprehensive enough as adjusting entries are not just for incorrect entries, but also for omissions or timing differences.

Why Are Adjusting Entries Required Before Closing the Books -