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The video tutorial discusses how to prepare adjusting entries to accurately record revenues and expenses in the accounting period they are earned or incurred. Adjusting entries are prepared at the end of each accounting period to convert a company's records to the accrual basis of accounting, with the main goal of matching incomes and expenses to the appropriate periods. Each adjusting entry involves one income statement account and one balance sheet account. Deferrals, including prepaid expenses and unearned revenues, and accruals, including accrued revenues and expenses, require adjusting entries to ensure accurate financial reporting.
