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Q. 3-7RQ

Horngren'S Financial And Managerial Accounting
Found in: Page 157

Short Answer

When are adjusting entries completed, and what is their purpose?

Adjusting entries are recorded at the end of the accounting year. The purpose is to report net income (loss), and assets and liabilities accurately.

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Step by Step Solution

Explanation on Adjusting Entries

Adjusting entries are year-end entries recorded to record earned revenues and incurred expense for the related period.

Purpose of Adjusting Entries

The purpose of adjusting entries are as follows:

  • Measuring accurate net income (loss) on the income statement
  • Measuring correct balance of assets and liabilities on the balance sheet

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