Every adjusting entry affects one balance sheet account and one income statement account.

Question

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Adjusting entries are made in the accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred. Each adjusting entry typically affects one balance sheet account (such as accounts receivable, prepaid expenses, or accrued liabilities) and one income statement account (such as revenue, expense, or income) to ensure that the financial statements comply with the accrual basis of accounting.

Every Adjusting Entry Affects One Balance Sheet Account and One