easy · Financial Accounting accounting-cycle-financial-statements

What is the primary reason that adjusting entries are necessary in an accrual system?

1. To ensure that total assets always equal total liabilities plus equity.
2. To reset the cash account balance to match the bank statement.
3. To ensure that revenues and expenses are reported in the correct period according to GAAP principles.
4. To correct errors made by the bookkeeping staff during the month.

Sign up free to see the explanation and track your rank →