Joe is pleased that his business transactions for the first three months have been completed. He recently sent you a text message asking "What comes next?" Compose an e-mail to Joe in response to his question. In your e-mail, explain the necessity for adjusting entries. Be sure to explain accrual accounting in your e-mail. What adjustments might Joe need to make for his business? Provide examples.
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After the completion of the business transactions, we need to pass some adjusting entries for the preparation interim financial statements and to comply with the accrual concept in the preparation of the financial statements. As soon as the quarter is closed, we need to pass and record some entries which are relevant for the current quarter but will actually take place in the next quarter.
The accrual accounting means that all revenues ...
The necessity for adjusting entries are determined.