Question

Why are adjusting entries necessary?

A. To record revenues and expenses.
B. To make debits equal credits.
C. To close nominal accounts at year end.
D. To correct erroneous balances in accounts

Answer 1

Option A) To record revenues and expenses

Step-by-step explanation:

The accounting accrual is an accounting method, it means that the company must record the revenues and expenses in the moment that the transactions occur and not when the payment is done.

By this method is always necessary to make adjustment entries to the accounting system if not it's impossible reflect all the transactions occured at this moment.