Question

Adjusting Entries are:

A. not required.
B. updating entries for previously unrecorded expenses or revenues.
C. will always affect cash.
D. corrections of errors.

Answer 1

Answer: B. updating entries for previously unrecorded expenses or revenues.

Explanation: Adjusting entries are updating for previously unrecorded expenses or revenues. They are entries used in recording business transactions that have taken place but have not yet been appropriately recorded in accordance with the accrual method of accounting—that recognizes revenue in the period in which it was earned and not when cash is received. It is also given as an entry in the general ledger that occurs at the end of an accounting period to record any unrecognized income or expenses for the accounting period. The matching principle is used to match expenses to the related revenue within the same accounting period.

Answer 2

The answer is B.

Step-by-step explanation:

Some business transactions are so huge or large to the extent that there might be omission or error in recording transactions when they occur.

Adjusting entries are done to update entries for previously unrecorded expenses or revenues. They are usually done at the end of the months.

Since accrual methods are the most preferred, they are done to make Financial statement achieve the objective of 'completeness'