An adjusting entry includes two balance sheet accounts or two income statement accounts.

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An adjusting entry typically includes one balance sheet account and one income statement account. The purpose of an adjusting entry is to ensure that the financial statements accurately reflect the financial position and performance of the company for the accounting period. Examples of adjusting entries include the recognition of prepaid expenses, accrued expenses or revenues, and depreciation expenses.

An Adjusting Entry Includes Two Balance Sheet Accounts or Two