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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

What is the purpose of adjusting entries?

To determine

Indicate the purpose of adjusting entries.

Explanation

Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and owners’ or stockholders’ equity) to maintain the records according to accrual basis principle and matching concept.

Matching concept: This accounting concept states that a company should recognize expenses in the same period those expenses are incurred to earn revenues.

Accrual principle: This principle represents to recording either an expense or revenue which does not involve cash...

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