Which adjustment would never require a reversing entry?
A) Accrued revenue
B) Accrued expense
C) Prepaid income (cash received originally recorded in an income account)
D) Depreciation

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense that is recorded to allocate the cost of a long-term asset over its useful life. It does not involve a cash transaction and therefore does not require a reversing entry. Accrued revenue and expense as well as prepaid income all involve a cash transaction and require reversing entries to ensure accurate financial statements.

Which Adjustment Would Never Require a Reversing Entry