Author Question: Explain why adjustments are needed at the end of each accounting period. What will be an ideal ... (Read 365 times)

joe · **on:** Jul 5, 2018

Explain why adjustments are needed at the end of each accounting period.

What will be an ideal response?

Question 2

The difference between the balance in the cash account on the depositor's books and the bank's books is usually due to errors.
a. True
b. False
Indicate whether the statement is true or false

Liamb2179 · **Reply #1 on:** Jul 5, 2018

Answer to Question 1

Adjustments are needed to update certain account balances at the end of each period. These updates are needed because of timing differences between collecting cash and earning revenue, and timing differences between paying cash and incurring expenses. Without these adjustments, the proper amounts of revenues and expenses would not be recorded on the income statement and the statement of changes in shareholders' equity. Similarly, assets, liabilities, and shareholders' equity would be misstated on the balance sheet.

Answer to Question 2

False