Why Are Adjusting Entries Recorded at the End of the Accounting

question 77

Multiple Choice

Why are adjusting entries recorded at the end of the accounting period?

• A)The Cash account must be adjusted for the effects of the daily transactions with customers and creditors.
• B)The company's accounts must be adjusted to ensure that debits are equal to credits prior to preparing the trial balance.
• C)Unrecorded accruals and deferrals must be recognized before the financial statements can be prepared.
• D)The data from the temporary accounts (revenues,expenses,and dividends)must be moved into the retained earnings account.

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Definitions:

Sales Returns And Allowances

Transactions where a customer returns goods to the seller or receives a reduction in the invoice price, thereby reducing the seller's sales revenue.

Sales Discounts

Reductions in the amount charged to customers as an incentive for early payment, recorded as a deduction from gross sales to calculate net sales.

Pay Accounts Promptly

The practice of settling owed amounts to suppliers or creditors within the agreed payment terms to avoid late fees and maintain good business relationships.

Merchandising Company

A business that purchases finished goods for resale, making profit primarily through the markup of these goods.