Adjustment entries : Adjusting entries are those entries which are made at the end of the year, to update all the balances in the financial statements, to show the true financial information, and to maintain the records according to accrual basis principle. Accrual basis principle: According to this principle of accounting, revenue should be recognized at the time when it is earned, doesn’t matter, it is received or not and expense should be recognized when it is incurred, doesn’t matter it is paid or not. Type of adjusting entries and accounts related to them.

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Chapter 3, Problem 3.8BE

To determine

Adjustment entries: Adjusting entries are those entries which are made at the end of the year, to update all the balances in the financial statements, to show the true financial information, and to maintain the records according to accrual basis principle.

Accrual basis principle: According to this principle of accounting, revenue should be recognized at the time when it is earned, doesn’t matter, it is received or not and expense should be recognized when it is incurred, doesn’t matter it is paid or not.

Type of adjusting entries and accounts related to them.

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