Why is it important to adjust accounts before completing financial statements?

Expert Solution

The adjustments are important to the preparation of the financial statements because-

Adjusting entries are necessary because a single transaction may affect revenues or expenses in more than one accounting period and also because all transactions have not necessarily been documented during the period.

The events that have not been documented yet are recorded through the adjusting entries

Adjusting entries allow the accountant to communicate a more accurate picture of the company’s finances.

End-of-period adjustments ensure that the financial statements reflect the true financial position and performance of a business by allocating to the appropriate period the income earned and expenses incurred.

Note-

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ekkarill92 answered 1 year ago

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