Which of the following statements regarding adjusting entries is true?
A)Accountants use adjusting entries to record explicit transactions at the end of each reporting period.
B)Adjusting entries are made on a daily basis as cash is exchanged between parties.
C)Adjusting entries have nothing to do with accrual accounting.
D)Adjusting entries are made at periodic intervals,usually when the financial statements are about to be prepared.
E)The recording of cash receipts from customers is an example of an adjusting entry.

Question

Quizplus · Accepted Answer

Adjusting entries are made at periodic intervals, usually when the financial statements are about to be prepared. These entries are necessary to ensure that financial statements reflect the correct amounts and account balances for the reporting period based on accrual accounting principles. Adjusting entries typically involve recognizing revenue or expenses that have been earned or incurred but have not yet been recorded, as well as updating balance sheet accounts such as prepaid expenses, accrued liabilities, and depreciation.

Which of the Following Statements Regarding Adjusting Entries Is True