Which of the following statements is false regarding adjusting enries?
A) Cash is neither debited nor credited as a result of adjusting entries.
B) Each adjusting entry affects one statement of financial position account and one income statement account.
C) Each adjusting entry affects one revenue account and one expense account.
D) Adjusting entries involve accruals or deferrals.

Question

Quizplus · Accepted Answer

Each adjusting entry affects one statement of financial position account (asset, liability, or equity) and one income statement account (revenue or expense). Adjusting entries involve accruals or deferrals to properly recognize revenues and expenses in the correct period, but cash is not necessarily involved in these entries. Statement C is false because not each adjusting entry affects one revenue account and one expense account.

Which of the Following Statements Is False Regarding Adjusting Enries