Every adjusting entry affects one balance sheet account and one income statement account.

Question

Quizplus · Accepted Answer

Adjusting entries are made in the accounting records at the end of an accounting period to allocate income and expenses to the period in which they actually occurred. Each adjusting entry affects one balance sheet account (such as accounts receivable, prepaid expenses, or accrued liabilities) and one income statement account (such as revenue, insurance expense, or interest expense), ensuring that both the income statement and balance sheet reflect the correct amounts.

Every Adjusting Entry Affects One Balance Sheet Account and One