The main purpose of adjusting entries is to
A)Recognize revenues received during the period.
B)Record external transactions and events.
C)Recognize expenses paid during the period.
D)Record internal transactions and events.
E)Adjust assets to their market value.

Question

Quizplus · Accepted Answer

The purpose of adjusting entries is to record internal transactions and events that were not initially recorded, such as accrued expenses or unearned revenues. This ensures that financial statements accurately reflect the company's financial position and performance. Option A and C describe the recognition of revenues and expenses during the period, which is done through routine journal entries, not adjusting entries. Option B is incorrect because adjusting entries do not necessarily involve external transactions or events. Option E is incorrect because adjusting entries do not adjust assets to their market value, but rather to their proper carrying value based on accounting principles.

The Main Purpose of Adjusting Entries Is to