A company must make adjusting entries
A) to ensure that the revenue recognition and expense recognition principles are followed.
B) each time it prepares an income statement and a statement of financial position.
C) to account for accruals or deferrals.
D) all of these answer choices are correct.

Question

Quizplus · Accepted Answer

Adjusting entries are important to ensure that the revenue recognition and expense recognition principles are followed, to properly account for accruals or deferrals, and to accurately reflect the financial position of the company. These entries are typically made at the end of an accounting period before preparing the financial statements. Therefore, option D, all of these answer choices are correct, is the best choice.

A Company Must Make Adjusting Entries