Each adjusting entry affects:
A) the income statement.
B) the balance sheet.
C) the cash account.
D) Both A and B are correct.

Question

Quizplus · Accepted Answer

Adjusting entries are made in the accounting records at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred. They affect both the income statement (by recognizing revenue earned or expenses incurred) and the balance sheet (by adjusting asset or liability accounts), but they do not directly affect the cash account.

Each Adjusting Entry Affects