The purpose of adjusting entries is to:

a. Adjust the Retained Earnings account for the revenue, expense, and dividends recorded during the accounting period.

b. Adjust daily the balances in asset, liability, revenue, and expense accounts for the effects of business transactions.

c. Apply the realization principle and the matching prin- ciple to transactions affecting two or more accounting periods.

d. Prepare revenue and expense accounts for recording the transactions of the next accounting period.