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

Question

Quizplus · Accepted Answer

This statement is incorrect because adjusting entries affect both income statement and balance sheet accounts. For example, an adjustment to record accrued salaries expense involves an income statement account (salaries expense) and a balance sheet account (accrued salaries payable).

Which of the Following Statements Is Incorrect