Question

Adjusting entries help achieve the goals of accrual accounting by applying the following two accounting principles:

a) Business entity concept and realization principle.
b) Cost principle and the accounting equation.
c) Realization principle and matching principle.
d) Matching principle and safety principle.

Answer 1

Adjusting entries help achieve the goals of accrual accounting by following the realization principle and the matching principle. Correct option is C.

Step-by-step explanation:

The correct answer is c) Realization principle and matching principle. Adjusting entries help achieve the goals of accrual accounting by following the realization principle and the matching principle. The realization principle states that revenue should be recognized when it is earned, regardless of when payment is received. The matching principle states that expenses should be recognized in the same period as the revenue they help generate.