An adjusting entry
A) affects two balance sheet accounts.
B) affects two income statement accounts.
C) affects a balance sheet account and an income statement account.
D) is always a compound entry.

Question

Quizplus · Accepted Answer

An adjusting entry affects a balance sheet account (prepaid expenses, accrued expenses, etc.) and an income statement account (revenue, expenses, etc.) in order to properly recognize revenue and expenses in the correct period. Therefore, option C is the correct answer.

An Adjusting Entry