Question

Adjusting entries are made

to match the consumption of prepaid assets against current revenues.

to record accrued expenses.

to record estimated items, such as depreciation.

for all of these reasons.

Answer 1

Answer

--Correct Answer = Option #4: All of these are the reasons for adjusting entries.

Adjusting entries are recorded:

>to match the consumption of prepaid assets against current revenues, for example Insurance expired and adjustment of Prepaid insurance.

>to record accrued expenses for example, Interest expense accrued and not paid on a notes payable.

>to record estimated items, such as depreciation expense on equipment.