Do you agree that these entries must be made before preparing financial statements? What new insight regarding adjusting entries have you gained from your classmates' posts? Support your responses with further research and/or additional adjusting entry examples.

In reference to my last post, an EV/Hybrid vehicle repair center would be a classified as service provided business. Two adjusting entries that would need considered are for the lease of the building and the utilities such as electricity, water and sewer.

Date	Account Title	PR	Debit	Credit
31-Dec	Utility Expense	101	$2,500
	Utility Payable	102		$2,500
31-Dec	Rent Expense	202	$3,000
	Rent Payable	203		$3,000

The purpose of the accrual entry is to show an expense that has been incurred but not yet paid. In my example normally utilities are charged the month after the utilities have been used. With the deferral adjustment this is to record normally property leases are paid upfront, so this entry would be to show how much of the lease has been used. In the example, the building lease was $36,000 a year so the entry would show $3000 used each month of the entry.

Adjusting entries are needed to update account balances before financial statements can be prepared to ensure the accuracy of each account. If the company doesn't make adjusting entries the balance sheet, profit & loss, income statement and cash flows may not be accurate (Girsh-Bock, 2022). Adjusted entries need to be recorded general ledger to ensure all debits and credits are reflected accurately and balance out. If not the company may not have an accurate picture of net worth or equity.