What type of adjustments are made in the AIS process before generating financial reports?

In the context of the Accounting Information System (AIS) process, adjustments made before generating financial reports are critical for ensuring the accuracy and completeness of the financial data. Accruals and adjustments are essential to reflect all financial activities accurately within a given reporting period.

Accruals refer to the recognition of revenues and expenses that have been incurred but not yet recorded in the accounting books. For instance, if a company has provided services in December but won't receive payment until January, an accrual must be made to ensure that the revenue is recognized in the correct accounting period. Similarly, expenses incurred during a period that aren’t yet paid must also be accrued to reflect the true financial position and performance accurately.

Adjustments encompass a broader range of corrections that may need to be made to the financial data. This can include adjusting entries for depreciation, amortization, and errors found during data entry or processing. These adjustments ensure that the financial statements comply with accounting principles and provide a true and fair view of the company's financial situation.

By making these accruals and adjustments, the AIS ensures that all financial reports generated are based on complete and up-to-date information, which is essential for stakeholders' decision-making processes.