Under the time period $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_,$ a companys activities are divided into timeperiods. But not all transactions are complete when financial statements are prepared andadjustments are required.Two accounting principles necessitate the need for adjustments:$1\mathrm{.}2.$EX $1$Balance Sheet: Prepaid Insurance Income Statement: Prepaid InsuranceAccrual Cash Accrual CashDec. $31,$ Y$1$ Y$1$Dec. $31,$ Y$2$ Y$2$Dec. $31,$ Y$3$ Y$3$Dec. $31,$ Y$4$ Y$4$