Adjusting entries always affect at least one balance sheet and one income statement account.

Question

Quizplus · Accepted Answer

Adjusting entries are made to ensure that the accounts reflect accurate financial information according to accrual accounting principles. Therefore, they can affect both balance sheet accounts (such as prepaid expenses or accrued liabilities) and income statement accounts (such as revenue or expenses that have been earned or incurred but not yet recorded).

Adjusting Entries Always Affect at Least One Balance Sheet and One