Adjusting entries are necessary to
1. obtain a proper matching of revenue and expense.
2. achieve an accurate statement of assets and equities.
3. adjust assets and liabilities to their fair market value.
A) 1
B) 2
C) 3
D) 1 and 2

Question

Quizplus · Accepted Answer

Adjusting entries are necessary for both obtaining a proper matching of revenue and expense (1) and achieving an accurate statement of assets and equities (2). Adjusting entries do not necessarily adjust assets and liabilities to their fair market value (3), as this can be done through other types of entries, such as revaluation entries.

Adjusting Entries Are Necessary to