Final answer:
Adjusting entries are made at the end of an accounting period to bring all accounts up to date on an accrual basis, so that the company can prepare correct financial statements.
Step-by-step explanation:
Adjusting entries are made at the end of an accounting period to bring all accounts up to date on an accrual basis, ensuring that the company can prepare correct financial statements. These entries help match revenues and expenses in the appropriate accounting period. For example, if a company has provided services to a customer but has not yet received payment, an adjusting entry is made to record the revenue earned and the corresponding accounts receivable.