What is the primary goal of adjusting entries at year-end?

The primary goal of adjusting entries at year-end is to recognize revenues and expenses in the correct period. This practice is rooted in the accrual basis of accounting, which dictates that revenues should be recorded when earned, and expenses recorded when incurred, regardless of when cash transactions occur.

By making these adjustments, businesses ensure that their financial statements accurately reflect the true financial performance and position for the accounting period, allowing stakeholders to make informed decisions based on the most reliable information. Recognizing revenues and expenses in the proper periods aligns with the matching principle, which seeks to correlate income with related expenses in the same timeframe, providing a clearer picture of profitability and operational efficiency.

While the other choices touch on important aspects of financial management, they do not capture the essence of why adjusting entries are critical at year-end, which is primarily about aligning financial reporting with the actual economic activities of the business.