Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 18 - No. 35)
In the context of accounting, what is the primary purpose of adjusting entries?
To correct errors in the general ledger.
To update the cash balance.
To record the impact of transactions that have occurred but haven't been recorded yet.
To simplify the preparation of the income statement.
Explanation
Adjusting entries ensure that revenues and expenses are recognized in the correct accounting period, reflecting the accrual basis of accounting.
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