Home › ACCA › Financial Accounting › Adjusting Entries › Adjusting entries are recorded at which point in…
Adjusting entries are recorded at which point in the accounting cycle?
AAt the end of the period, before the financial statements are prepared
BDaily, at the same time each transaction is first journalised
CAt the end of the period, after the financial statements are prepared
DOnly when an external auditor requires a correction to the ledger
Answer & Solution
Correct answer: A. At the end of the period, before the financial statements are prepared
1. Adjusting entries bring certain account balances up to date.
2. They are made just before financial statements are prepared, ruling out C (which describes closing entries).
3. They are period-end, not daily, ruling out B.
4. They are routine period-end entries, not audit-triggered, ruling out D, so A is correct.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §2.2.1 "Adjusting Entries", p.55_