Question

Adjusting entries are made to ensure that: Select one: a. expenses are recognized in the period in which they are incurred. b. revenues are recorded in the period in which the performance obligation is satisfied. c. balance sheet and income statement accounts have correct balances at the end of an accounting period. d. All of the above.

Answer 1

Answer:

D. All of the above

Explanation:

Option A: It is correct because accrued expenses are paid or prepaid expenses are expired at the end of the accounting period. Therefore, adjusting entries are necessary.

B: Unearned revenue becomes revenue at the end of the period, hence, adjusting entries are important.

C: The remaining balance of prepayments and accruals will be adjusted at the end of the accounting period.

Therefore, all the options are correct.