Which of the following best describes adjusting entries for accrued revenues?

• A. Entries made to close temporary accounts to retained earnings.
• B. Entries made to record expenses that have been paid in advance.
• C. Entries made to correct errors found in the general ledger.
• D. Entries made at the end of a fiscal period to record revenues that have been earned but not yet received or recorded.

Answer: (D)

Verified step by step guidance

1. Understand the concept of accrued revenues: Accrued revenues are revenues that have been earned during a fiscal period but have not yet been received in cash or recorded in the accounting system.
2. Recognize the purpose of adjusting entries: Adjusting entries are made at the end of a fiscal period to ensure that all revenues and expenses are properly recorded in the correct accounting period, following the accrual basis of accounting.
3. Identify the specific nature of adjusting entries for accrued revenues: These entries are used to record revenues that have been earned but not yet received or recorded, ensuring compliance with the revenue recognition principle.
4. Distinguish accrued revenues from other types of adjusting entries: Accrued revenues differ from entries for prepaid expenses, closing entries, or error corrections, as they specifically deal with earned but unrecorded revenues.
5. Conclude that the correct description of adjusting entries for accrued revenues is: 'Entries made at the end of a fiscal period to record revenues that have been earned but not yet received or recorded.'