An adjusting entry includes at least one balance sheet account and at least one income statement account.

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An adjusting entry is made to update accounts related to revenues and expenses, such as prepaid expenses, accrued expenses, unearned revenues, and accrued revenues. These adjustments typically involve both balance sheet and income statement accounts. Therefore, an adjusting entry includes at least one balance sheet account and at least one income statement account.

An Adjusting Entry Includes at Least One Balance Sheet Account