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Why are Adjusting Entries performed in accounting?

Why are Adjusting Entries performed in accounting?

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Adjusting entries are passed to ensure transactions pertain to the accounting period for which accounting is done. It involves passing entries for year-end adjustments like outstanding, prepaid expenses, unearned revenue, depreciation, inventory adjustments, etc. Passing theses entries is in line with the fundamental accounting concept of Accrual Accounting. These entries are usually passed after unadjusted trial balance is prepared. Adjusted trial balance is taken after year-end adjustment entries are posted.

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