What is adjusting the accounts the process of?

Answer 1

Adjusting the accounts is the process of updating the financial records of a company to ensure that they accurately reflect the revenues and expenses incurred during a specific accounting period. This often involves making necessary adjustments for accrued revenues, accrued expenses, deferred revenues, and prepaid expenses. The goal is to adhere to the matching principle of accounting, ensuring that income and related expenses are recorded in the same period. Ultimately, this process helps in preparing financial statements that provide a true and fair view of the company's financial position.