If adjusting entries are not prepared, which financial statements are misstated?

Name: If adjusting entries are not prepared, which financial statements are misstated?
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Question

Quizplus · Accepted Answer

Adjusting entries ensure that all revenues and expenses are recorded in the correct accounting period, affecting the income statement. They also adjust asset and liability accounts, impacting the balance sheet. Consequently, the statement of retained earnings is affected as it relies on accurate net income and dividends.

If Adjusting Entries Are Not Prepared, Which Financial Statements Are