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3.8: Effects of failing to prepare adjusting entries

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  • Failure to prepare proper adjusting entries causes net income and the balance sheet to be in error. You can see the effect of failing to record each of the major types of adjusting entries on net income and balance sheet items in Exhibit 18.

    Using MicroTrain Company as an example, this chapter has discussed and illustrated many of the typical entries that companies must make at the end of an accounting period. Later chapters explain other examples of adjusting entries.

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