Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 25 - No. 48)
Which of the following are reasons to make adjustments to financial statements? (Select all that apply)
To ensure all revenues are recognized in the period they are earned.
To report the most current estimates of asset values.
To record the effects of expired prepaid expenses.
To match expenses to the revenues they help generate.
Explanation
Adjustments ensure revenues and expenses are recognized in the correct period, include changes in values due to asset usage, and account for expired prepaid expenses and bad debts.
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