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Why are adjusting entries necessary Surely they cause too much delay in preparing financial statements and the financial effects on any entries made are immaterial in the long run. Respond to this criticism - Essay Example

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The adjusting entries have to be a debit or credit depending on the nature of transaction. They require a systematic approach and always are done for each transaction. The accounting entries are steps and accounting principles…
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Why are adjusting entries necessary Surely they cause too much delay in preparing financial statements and the financial effects on any entries made are immaterial in the long run. Respond to this criticism
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"Why are adjusting entries necessary Surely they cause too much delay in preparing financial statements and the financial effects on any entries made are immaterial in the long run. Respond to this criticism"

Download file to see previous pages Businesses do incur a lot from the cost of raw materials also to the waiting capital. This is experienced in certain different types of business. One necessary for adjusting entries For the business to understand the closing stock and also the net profit it has to understand or always account from the opening stock to the cost incurred through in the business. It is impossible to account for all these costs without having adjusting entries periodically. Adjusting entries makes it possible for the business to be able to understand its financial liquidation.
Adjusting entries makes one to understand the cost of depreciation for the business asset. It is hard for a business to understand the cost of its asset if this is not done. Also having understood the cost of its asset this might bring other benefit like the lowering of financial cost that is done annually. The entries are also able to show the amount of payable or amount received in stages this helps reduce errors that may occur.
The business world or the accounting world faces challenges in the accounts payable and receivable. This may happen when the entries are not kept properly and this may also result to different calculations. This can be sorted out by adjusting entries that record a day to day transaction of the business. In accounting there are different types of assets that is current asset and fixed asset. The current asset changes within day to day activities and it is thus proper to keep it focused by engaging in the journal entries as this brings more of accountable calculation as to what and when anything happened(Egan,2011,pg71).
Adjusting entries makes it able to record accrual and other cost this cost are important so as to understand after recording journals one is able to understand the cost that the business or the organization are doing. This has been the sense and it is thus good to note is that having an updated journal entries brings out a ...Download file to see next pagesRead More
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