Why Is It Necessary to Make Adjusting Entries

question 19

Multiple Choice

Why is it necessary to make adjusting entries?

• A) The accountant has made errors in recording external transactions.
• B) Certain facts about the affairs of the business are not included in the ledger as built up from external transactions.
• C) The accountant wants to show the largest possible net income for the period.
• D) The accountant wants to show the net cash flow for the year.

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Definitions:

Approval

The action of officially agreeing to something or accepting something as satisfactory.

Reciprocal Determinism

A concept in psychology emphasizing the mutual influence between a person's behavior, personal factors, and the environment.

Self-serving Bias

A frequent inclination to credit good outcomes to personal qualities while blaming bad outcomes on outside circumstances.

Defensive Self-esteem

A form of self-esteem that is fragile and vulnerable to criticism, leading individuals to react defensively to perceived threats.