The Basics Of Adjusting Entries

In order for revenues and expenses to reported in the correct period, companies make adjusting entries at the end of the accounting period. Adjusting entries ensure that the revenue recognition and matching principles are followed. Adjusting entries make it possible to report corect amounts on the balance sheet and on the income statement.
The trial balance-the first summarization of the transaction data-may not contain up-to-date and complete data. This is true for several reason :