Which of the following statements is incorrect?
A) Adjustments to prepaid expenses, depreciation, and unearned revenues involve previously recorded assets and liabilities.
B) Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded.
C) Adjusting entries can be used to record both accrued expenses and accrued revenues.
D) Prepaid expenses, depreciation, and unearned revenues often require adjusting entries to record the effects of the passage of time.
E) Adjusting entries affect the cash account.

Question

Quizplus · Accepted Answer

Adjusting entries do not directly affect the cash account. They only affect the income statement and balance sheet accounts.

Which of the Following Statements Is Incorrect