Which statement about adjusting entries is false?
A) Adjusting entries are often made because some business events are not recorded as they occur.
B) Adjusting entries are recorded in the general journal but are not posted to the accounts in the general ledger.
C) And adjusting entry would adjust a revenue transaction so it reported when the revenue is earned.
D) Before an adjusting entry for prepaid expense is recorded, assets will be overstated and expenses will be understated.

Question

Quizplus · Accepted Answer

Adjusting entries are required before financial statements are prepared because of timing differences between when revenues are earned and the related cash is received and when expenses are incurred and the related cash is paid.

Which Statement About Adjusting Entries Is False