Which of the following statements about adjusting entries is true?
A)Adjusting entries may involve the cash account.
B)Adjusting entries are required whenever the accounting records are updated.
C)Adjusting entries always involve an expense account.
D)Adjusting entries always include at least one balance sheet account and one income statement account.

Question

Quizplus · Accepted Answer

Adjusting entries are made at the end of an accounting period to ensure that the financial statements are accurate and up-to-date. These entries always involve at least one balance sheet account (such as prepaid expenses or accrued liabilities) and one income statement account (such as depreciation expense or accrued revenue). Adjusting entries may or may not involve the cash account, depending on the nature of the adjustment needed. They are not required every time the accounting records are updated, but only at the end of each reporting period. Adjusting entries do not always involve expense accounts, as they can also involve revenue, asset, and liability accounts.

Which of the Following Statements About Adjusting Entries Is True