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:

Investing

The process of distributing funds with the aim of earning a return or profit.

Operating

Refers to the functioning or management of operations within a business or computer environment.

Financial Reports

Financial reports are formal records of the financial activities and position of a business, person, or other entity.