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explain briefly the importance of preparing and recording adjusting entries​

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Shielacaringal611viz

Answer:

Adjusting entries are necessary because a single transaction may affect revenues or expenses in more than one accounting period and also because all transactions have not necessarily been documented during the period.

Adjusting entries are necessary to update all account balances before financial statements can be prepared. ... The accountant examines a current listing of accounts—known as a trial balance—to identify amounts that need to be changed prior to the preparation of financial statements.

Step-by-step explanation:

Importance of adjusting entries

  • To update the financial statements
  • To settle the accrued financial transactions
  • To settle the advanced financial transactions
  • To ensure the exact revenues
  • To ensure the exact expenses
  • To rectify any error
  • To adjust pre-payments and due payments

Adjusting entries update the financial statements of a business concern.

Importance of adjusting entries

Adjusting entries are required for the following reasons:

  • Some events are not journalized on a daily basis, for example, the earning salary by the employees
  • Some costs are expired with the passage of time. They are not recorded during an accounting period. examples are rent depreciation and insurance.
  • Some items may be unrecorded example utility expenses are paid but not record in the book, in this case, it is highly required adjusting entry.

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