The existence of financial statements is one of the primary reasons accountants do what they do. Before financial statements can be prepared, certain adjustments to account balances must be made. Knowing why adjustments are made allows you to consider what adjustments must be made.
It is the end of the quarter for your business, and you and your business partner would like to prepare financial statements. Before creating the statements, you need to make some adjustments for some transactions that have started but are not yet finished.
What are some examples of transactions that may have started during the period but have not finished by the end of the period?
As the manager of a business, why is it important to make sure that adjusting entries are made? What would be the effect on the financial statements if adjusting entries were not made?
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