The preparation of adjusting entries is
A) straight forward because the accounts that need adjustment will be out of balance.
B) required every time financial statements are prepared.
C) only required for accounts that do not have a normal balance.
D) optional when financial statements are prepared.

Question

Quizplus · Accepted Answer

Adjusting entries are necessary every time financial statements are prepared to ensure that revenues and expenses are recognized in the period in which they are incurred, regardless of when cash transactions occur. This is part of the accrual basis of accounting.

The Preparation of Adjusting Entries Is