Adjusting entries are made at the end of an accounting period to bring the accounts up to date on an accrual accounting basis. They are necessary for several reasons:

1. To ensure that revenue recognition principles are followed: Revenue should be recognized when it is earned, regardless of when payment is received. Adjusting entries ensure that revenues are recorded in the period they are earned.

2. To ensure that the matching principle is followed: Expenses should be matched with the revenues they helped to generate in the same accounting period. Adjusting entries ensure that expenses are recorded in the period they are incurred.

3. To enable financial statements to conform with GAAP (Generally Accepted Accounting Principles): GAAP requires that companies use accrual accounting and make necessary adjustments at the end of each accounting period.

However, adjusting entries are not necessary to bring the general ledger accounts in line with the budget. The budget is a planning tool and does not affect the actual accounting records. Therefore, the correct answer is: Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

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Adjusting entries are made at the end of an accounting period to bring the accounts up to date on an accrual accounting basis. They are necessary for several reasons:

1. To ensure that revenue recognition principles are followed: Revenue should be recognized when it is earned, regardless of when payment is received. Adjusting entries ensure that revenues are recorded in the period they are earned.

2. To ensure that the matching principle is followed: Expenses should be matched with the revenues they helped to generate in the same accounting period. Adjusting entries ensure that expenses are recorded in the period they are incurred.

3. To enable financial statements to conform with GAAP (Generally Accepted Accounting Principles): GAAP requires that companies use accrual accounting and make necessary adjustments at the end of each accounting period.

However, adjusting entries are not necessary to bring the general ledger accounts in line with the budget. The budget is a planning tool and does not affect the actual accounting records. Therefore, the correct answer is: Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

Knowee AI · Accepted Answer

Adjusting entries are made at the end of an accounting period to bring the accounts up to date on an accrual accounting basis. They are necessary for several reasons:

1. To ensure that revenue recognition principles are followed: Revenue should be recognized when it is earned, regardless of when payment is received. Adjusting entries ensure that revenues are recorded in the period they are earned.

2. To ensure that the matching principle is followed: Expenses should be matched with the revenues they helped to generate in the same accounting period. Adjusting entries ensure that expenses are recorded in the period they are incurred.

3. To enable financial statements to conform with GAAP (Generally Accepted Accounting Principles): GAAP requires that companies use accrual accounting and make necessary adjustments at the end of each accounting period.

However, adjusting entries are not necessary to bring the general ledger accounts in line with the budget. The budget is a planning tool and does not affect the actual accounting records. Therefore, the correct answer is: Adjusting entries are necessary to bring the general ledger accounts in line with the budget.

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