In Developing an Accounting Information System It Is Important to Establish

question 172

Essay

In developing an accounting information system it is important to establish procedures whereby all transactions that affect the components of the accounting equation are recorded. Why then is it often necessary to adjust the accounts before financial statements are prepared even in a properly designed accounting system? Identify the major types of adjustments that are frequently made and give a specific example of each.

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Definitions:

Investment Projects

Initiatives or plans undertaken to allocate resources, expecting to generate returns or benefits over time.

Loanable Funds

The market for lending and borrowing of capital, where the supply comes from savings and the demand comes from borrowers.

Government Deficit

A situation where a government's expenditures exceed its revenues.

Loanable Funds

A term in economics that refers to all the money available for borrowing in the financial markets, determined by the level of savings vs. the demand for borrowing.