Adjusting entries are required
A) because some costs expire with the passage of time and have not yet been journalized.
B) when the company's profits are below the budget.
C) when expenses are recorded in the period in which they are incurred.
D) when revenues are recorded in the period in which services are performed.

Question

Quizplus · Accepted Answer

Adjusting entries are required because some costs expire with the passage of time, such as prepaid expenses or accumulated depreciation, and have not yet been journalized. Adjusting entries ensure that expenses and revenues are recorded in the correct accounting period. Adjusting entries are not related to the company's profits or the recording of expenses and revenues in the appropriate period.

Adjusting Entries Are Required