The preparation of adjusting entries
A)is straight-forward because the accounts that need adjustment will be out of balance.
B)requires an understanding of the company's operations and the inter-relationship of accounts.
C)is only required for accounts that do not have a normal balance.
D)is optional when financial statements are prepared.

Question

Quizplus · Accepted Answer

Adjusting entries are necessary to ensure that the revenue recognition and matching principles are followed, making the financial statements accurate. This process requires a deep understanding of how different transactions affect the financial statements and the relationships between accounts, rather than being straightforward, optional, or limited to accounts without a normal balance.

The Preparation of Adjusting Entries