The main purpose of adjusting entries is to:
A) Record external transactions and events.
B) Record internal transactions and events.
C) Recognize assets purchased during the period.
D) Recognize debts paid during the period.
E) Correct errors.

Question

Quizplus · Accepted Answer

Adjusting entries are primarily made to record internal transactions and events that have not been recorded through daily entries. They are used to update the accounts to their correct balances before financial statements are prepared, ensuring that revenues and expenses are recognized in the period in which they occur, regardless of when cash transactions related to them happen.

The Main Purpose of Adjusting Entries Is To