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2.3 - Discussion: Adjusting EntriesTextron Systems -materials/default.aspxWhat are adjusting entries and why are they necessary?Adjusting entries are usually completed on the last day of an accounting period to reflect the revenues that have been earned and the expenses that were incurred during that accounting period. Adjusting entries are required because one transaction can affect more than one accounting period and they balance out the assets and liabilities accounts. They are needed to properly measure items such as the income/loss amount, expense amount, asset amount and liability amount.In your chosen company, which accounts might require adjusting entries?There are two basic types of adjusting entries: Deferrals (prepaid expenses; unearned revenues) and Accruals (unpaid expenses; unpaid revenues). After looking at Textron Systems annual report, I found that the following accounts may require adjusting entries:
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Generally Accepted Accounting Principles, Continuing Operations