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Adjusting entries are required by the historical cost principle of accounting." Do you agree? Explain

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

ChapterFS: Financial Statements For Mornin' Joe International

Section: Chapter Questions

Problem 2DQ

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Question

“Adjusting entries are required by the historical cost principle of accounting." Do you agree? Explain.

Definition Definition Entries made at the end of every accounting period to precisely replicate the expenses and revenue of the current period. This is also known as end of period adjustment. It can also refer to financial reporting that corrects errors made previously in the accounting period. Every adjustment entry affects at least one real account and one nominal account.

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The accounting records are maintained on the basis of different principles, like historical concept, revenue and expenses recognition concept.

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