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4 Cards in this Set
- Front
- Back
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Why is the accrual basis of account better? |
It is more comprehensive and complete as it: -provides a better measure of profit in the income statement -provides a more accurate and complete measure of value of assets and liabilities in statement of financial position |
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When are end of period adjusting entries recorded? And why? |
At end of financial period for which entity is reporting -to correct and update accounting records at end of financial period |
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Why is it important that adjusting entries are made at the end of a financial period? |
-so that a more accurate and correct measure of net income can be determined at end of financial period. -Net profit is more complete and accurate. -it complies with the Fundamental characteristics of Relevance and Faithful representation. -can be relied upon to make predictions about firm’s future financial status |
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When is adjusting entries recorded ? |
-end of financial period, after the extraction of the year end trial balance aka PRE-adjustment trial balance |
