Question

Adjusting the accounts is the process of A. recording transactions as they occur during the period. B. subtracting expenses from revenues to measure net income. C. updating the accounts at the end of the period. D. zeroing out account balances to prepare for the next period.

Answer 1

Answer:

C. updating the accounts. (this last part shouldn't be included here: at the end of the period).

Explanation:

Accounts can be adjusted on a daily basis, and even more than once per day depending on certain relevant events, or they can be adjusted on a weekly, monthly, quarterly or yearly. yearly adjustments are also called end of period adjustments.

For example, the conservatism principle states that expenses and losses have to be reported immediately, and if a company determines that an insolvent customer will not pay an account in January, they must report it immediately, not wait until December 31, to adjust that account. On the other hand, if this insolvent client pays his debt in July, the reversal of bad debt expense and the recording of the collection must be done immediately.

Even though accounting considers mostly past events, those events must be recorded swiftly in order to keep there relevance. Imagine the previous customer who paid his account in July, if the accounting records are not properly updated, a legal collection process could start or keep going even though the client doesn't owe any money. That can cause serious issues to the company because it is responsible for keeping updated records.  

Answer 2

Answer:

C. updating the accounts at the end of the period.

Explanation:

Adjusting the accounts is the process whereby  transactions are reviewed ( usually at the end of an accounting period) to ascertain that all transactions have been recorded. This process ensures that necessary adjustment are made where necessary.

For example, a prepaid insurance account may require adjustments that will ensure that insurance expense is recognized in the books. This may be done by determining the period of expired insurance and posting necessary entries. The process of doing this is known as adjusting the accounts.