Which of the following statements is incorrect?
A) Adjusting entries affect only balance sheet accounts.
B) Adjustments to prepaid expenses and unearned revenues involve previously recorded assets and liabilities.
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) Accrued expenses and accrued revenues involve assets and liabilities that had not previously been recorded.

Question

Quizplus · Accepted Answer

Adjusting entries affect both balance sheet and income statement accounts. They are necessary to ensure that the financial statements are accurate and up-to-date by accounting for transactions or events that have occurred but are not yet reflected in the accounts.

Which of the Following Statements Is Incorrect