A broad principle/assumption that requires identifying the activities of a business with specific time periods such as months, quarters, or years is the:
Time period assumption
Adjusting entries are journal entries made at the end of an accounting period for the purpose of:
1. Updating liability and asset accounts to their proper balances. 2. Assigning revenues to the periods in which they are earned. 3. Assigning expenses to the periods in which they are incurred. 4. Assuring that financial statements reflect the revenues earned and the expenses incurred.
An adjusting entry could be made for each of these: