Identify the purpose of
Answer to Problem 1STQ
Option (c) is the correct answer.
Apply the realization principle and the matching principle to transactions affecting two or more accounting periods.
Explanation of Solution
Option (a) Adjust the
Option (b) Adjust daily the balances in asset, liability, revenue, and expense accounts for the effects of business transaction is not the purpose of adjusting entries. Thus, option (b) is not the correct answer.
Option (c) Apply the realization principle and the matching principle to transactions affecting two or more accounting period is the purpose of adjusting entries. Thus, option (c) is the correct answer.
Option (d) Prepare revenue and expense accounts for recording the transactions of the next accounting period is not the purpose of the adjusting entries. Thus, option (d) is not the correct answer.
Thus, as per the above explanation option (a), (b), and (d) are the wrong answers. Hence, Option (c) is the correct answer.
Thus, Option (c) is the correct answer.
Apply the realization principle and the matching principle to transactions affecting two or more accounting periods.
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Chapter 4 Solutions
Financial Accounting
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