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Case: Some examples of transactions that may have started during the quarter and not finished by the end of the quarter are purchasing goods on credit and borrowing funds from a creditor or bank. In both cases the transactions would affect at least two accounts on the financial statements. If we were to purchase furniture for our furniture store, this would affect the assets account and the liability account.
As the manager of a business, it would be important to make sure that adjusting journal and transaction entries are made because I would need my statements to balance, and unbalanced statements may affect my business' credibility or creditworthiness in the future. I would want to ensure my bookkeeper had the amounts correct. It would be imperative to make sure the amounts matched. By actively working towards accurately recording the transactions, I would not be paying for expenses prior to them being incurred or allocating revenues not yet received. For instance, the trial balance may not hold up-to-date transaction data.
Question: What would be a good response to the above?
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