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Question

Accruals are recorded in the books of accounts through:

A an adjustment entry Correct Answer Incorrect Answer
B a closing entry Correct Answer Incorrect Answer
C a closing entry or by adjusting purchases through an adjustment entry Correct Answer Incorrect Answer
D an opening entry Correct Answer Incorrect Answer

Solution

Accruals are transactions for which revenue or expenses have been earned or incurred but have not yet been recorded in the books. They are recognized through adjusting entries at the end of an accounting period to ensure that the financial statements reflect the correct revenue and expenses for that period. By making an adjustment entry, the company can match revenues and expenses with the accounting period in which they are earned or incurred, in accordance with the accrual accounting principle.

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