1. Why must the financial data be adjusted prior to it being made into one of...

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1. Why must the financial data be adjusted prior to it being made into one of...

1. Why must the financial data be adjusted prior to it being made into one of the financial statements used by the firm?

2. Who assures that the firm is producing the financial statements based on GAAP and who ultimately is responsible for the accuracy of the data?

business accounting

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Answer 1

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1.

Prior to producing financial statements, accountant must check and adjust all the changes that have been omitted.
Adjusting entries are necessary because it may affect the revenues and expenses of more than one accounting period and also because the necessary transactions must be documented.
These adjustments are an important step before preparation of financial statements. They are similar to journal entries but occur at a different time and due to different reason.
The primary responsibility of the accountant is to check the financial data before the release of the financial statements so that it is fairly presented. Such investigation can lead to numerous adjustments.

2.

Auditor assures that the firm is producing the financial statements based on GAAP. If the auditor believes that the firm is compliant, they give the statement that the financial statements are fairly presented in all material aspects in confirmity with GAAP.
The primary responsibility for the accuracy of financial data and the conformance with GAAP of information presented in financial statements is of the management, generally the CEO & CFO.

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