An adjusting entry should never include
A) a debit to an expense account and a credit to a liability account.
B) a debit to an expense account and a credit to a revenue account.
C) a debit to a liability account and a credit to revenue account.
D) a debit to a revenue account and a credit to a liability account.

Question

Quizplus · Accepted Answer

Adjusting entries are made to update the accounts before financial statements are prepared and typically involve reallocations between revenues, expenses, assets, and liabilities. They do not involve direct transfers between revenue and expense accounts, as these categories serve different purposes in accounting: revenues increase equity, while expenses decrease it.

An Adjusting Entry Should Never Include