Which of the following statements about adjusting entries is true?
A) Adjusting entries always include at least one balance sheet account and one income statement account.
B) Adjusting entries may involve the cash account.
C) Adjusting entries always involve an expense account.
D) Adjusting entries are required whenever the accounting records are updated.

Question

Quizplus · Accepted Answer

Adjusting entries are made to ensure that revenue and expense recognition principles are followed. They always include at least one balance sheet account (to adjust assets or liabilities) and one income statement account (to adjust revenues or expenses), ensuring that the accounting equation remains balanced and that the financial statements reflect the correct amounts.

Which of the Following Statements About Adjusting Entries Is True