Revenue and expense recognition rules


If adjusting entries are not made each accounting period, the revenue and expense recognition rules are violated and you will obtain a distorted view of your company"s profitability. Closing entries are required each accounting period to "zero out" the revenue and expense accounts. If these accounts are not closed each accounting period, it would be very difficult to determine your business"s net income for subsequent accounting periods. Why?

Request for Solution File

Ask an Expert for Answer!!
Business Management: Revenue and expense recognition rules
Reference No:- TGS0116252

Expected delivery within 24 Hours