Lesson 3 Essay - Discuss the adjusting and closing processes How are the revenue recognition and matching principles involved Describe the differences

Lesson 3 Essay - Discuss the adjusting and closing...

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Discuss the adjusting and closing processes. How are the revenue recognition and matching principles involved? Describe the differences between the unadjusted, adjusted, and post closing trial balances. The adjustment process in accounting involves adding adjustment entries at the end of the accounting period to ensure that the total account balances at the end of the accounting period are correct. To do this, we use accrual and deferral adjusting entries to ensure that the revenue recognition and matching principles are followed. Kemp and Waybright describe the revenue recognition principle in "Financial Accounting" as "revenues recognized or recorded when they are earned, regardless of when cash is received" (p. 126). On the other hand, the matching principle explains that expenses should be recorded when they are incurred, regardless of when the cash is paid out for expenses. The closing process involves journal entries that are prepared at the end of the accounting period, after the adjusted trial balance and financial statements have been prepared. The

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