What type of adjustment is required at year-end for accrued revenues?

At year-end, accrued revenues refer to amounts that have been earned by providing goods or services but have not yet been received or recorded in the accounts. This situation necessitates the recognition of revenues in the financial statements, which aligns with the revenue recognition principle of accrual accounting. According to this principle, revenues should be recognized when they are earned, regardless of when cash is actually received.

When adjusting for accrued revenues, the corresponding journal entry typically involves debiting an asset account (such as Accounts Receivable) to acknowledge the right to receive cash in the future, while crediting a revenue account to reflect the income that has been earned during the accounting period. This adjustment ensures that the financial statements accurately represent the company's financial position and performance over that period, aligning reported revenues with the actual activities that have taken place.

Other options do not accurately address the necessary adjustment for accrued revenues. For instance, reclassification of assets wouldn't apply, as accrued revenues are about recognizing income rather than shifting assets. Recognition of expenses pertains to costs incurred, not revenue earned. Deferment of revenues would suggest that income is being pushed to a future period rather than recognized in the current period, which contradicts the concept of accrued revenues.