Adjusting entries are primarily needed for:
A) Cash basis accounting.
B) Accrual accounting.
C) Current value accounting.
D) Manual accounting systems.

Question

Quizplus · Accepted Answer

Adjusting entries are necessary for accrual accounting to properly match revenues and expenses in the appropriate accounting period, and to reflect the accurate financial position of the company. Cash basis accounting records transactions only when cash is received or paid, and therefore does not require adjusting entries. Current value accounting involves adjusting financial statements to reflect current market value of assets and liabilities, and therefore adjusting entries may be necessary but it is not the primary purpose. Manual accounting systems do not necessarily require adjusting entries, but adjusting entries are typically used in all types of accounting systems to accurately reflect the financial position of the company.

Adjusting Entries Are Primarily Needed For