What are the changes made on a work sheet to update general ledger accounts at the end of a fiscal period called?

• A. Corrections
• B. Adjustments
• C. Reconciliations
• D. End-of-Period Entries

Answer: (B)

The changes made on a work sheet to update general ledger accounts at the end of a fiscal period are referred to as adjustments. This process is essential for ensuring that the financial statements accurately reflect the company’s financial position and performance. Adjustments may include entries for accrued revenues, accrued expenses, deferred revenues, and prepaid expenses. These entries are necessary to adhere to the accrual basis of accounting, where revenues and expenses are recorded when they are earned or incurred, not merely when cash is exchanged. Thus, adjustments help to align the recorded amounts in the general ledger with the actual financial activities and events that took place during the fiscal period, allowing for more accurate reporting and analysis.