Lynch Custom Adventures utilizes accrual-basis accounting. Until the ________ proves the ________ of debits and credits, Lynch will be unable to prepare GAAP-based financial statements.
Until the adjusted trial balance proves the equality of debits and credits, Lynch will be unable to prepare GAAP-based financial statements.
Explanation:
The method of accrual basis accounting simply uses the technique of recording the transactions under two different heads. These heads are 'revenue' and 'expenses'
In this method, whatever income the organization gets is recorded under the 'revenue' head and the costs that are incurred are recorded under the 'expenses' head.
This dispenses convenience of both, recording the transactions and tallying them at the end.
