Why must one understand accrual basis accounting and how does this process play a huge role...

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Why must one understand accrual basis accounting and how does this process play a huge role...

Why must one understand accrual basis accounting and how does this process play a huge role in the adjusting entry process?

What are the five types of adjusting entries?

business accounting

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Answer 1

Answer #1

accrual basis accounting works on matching principle that states revenue to be recognised in the period in which expense is incurred. therefore the need of adjusting entries arises.

need of accrual basis of accounting - Accrual accounting gives companies a truer picture of their assets and liabilities.

types of adjusting entries -

1. Accrued revenues

2. Accrued expenses

3. Deferred revenues

4. Deferred expenses

5. Depreciation expense

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Answer 2

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