Which one of the following is not a justification for adjusting entries?
A) Adjusting entries are necessary to ensure that revenue recognition principles are followed.
B) Adjusting entries are necessary to ensure that the expense recognition principle is followed.
C) Adjusting entries are necessary to enable financial statements to be in conformity with IFRS.
D) Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

Question

Quizplus · Accepted Answer

Adjusting entries are not made to bring the general ledger accounts in line with the budget because the budget is a plan for future operations, while adjusting entries are made to reflect the actual results of past operations. Adjusting entries are made to ensure that the financial statements are accurate, complete, and in compliance with accounting standards such as IFRS, and to ensure that revenue and expenses are recognized in the appropriate period in accordance with the revenue and expense recognition principles.

Which One of the Following Is Not a Justification for Adjusting