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In: Accounting

Explain the purpose of adjusting entries at the end of a period.

Explain the purpose of adjusting entries at the end of a period.

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Expert Solution

Adjusting entries are made toward the finish of the year to refresh the balance in the account to their present balance.

The primary reason for adjusting entries is to refresh the accounts to accommodate with the accrual idea. Toward the finish of the accounting period, some income and expenses may have not been recorded, taken up or refreshed; subsequently, there is a need to refresh the accounts.

On the off chance that adjusting entries are not prepared, some income, cost, asset, and liability accounts may not mirror their actual qualities when detailed in the financial statements. Therefore, adjusting entries are fundamental.

For the most part, there are 4 kinds of adjusting entries. Adjusting entries are prepared for the accompanying:

Collected Income – income earned however not yet got

Collected Expense – expenses caused yet not yet paid

Deferred Income – income got yet not yet earned

Prepaid Expense – expenses paid yet not yet caused

ekkarill92 answered 7 months ago
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