Adjusting entries are required:
a. every time financial statements are prepared.
Financial accounting is one of the branches of accounting. It ensures that organizations and professionals prepare and present accounting information using an acceptable accounting framework. Financial accounting enables the preparation and presentation of financial reports to be used by external users.
Answer and Explanation:
- The correct answer is (option a). Adjusting entries are important in that they ensure that revenue and expense recognition principles are complied with. It is important to recognize that the trial balance may not be complete and up to date. For this reason, there is a need to adjust the entries in the trial balance so that they are up to date and complete every time financial statements are prepared (option a).
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from Corporate Finance: Help & ReviewChapter 8 / Lesson 7