An adjusting entry must contain
A)two balance sheet accounts.
B)two income statement accounts.
C)a balance sheet account and an income statement account.
D)an asset account and a liability account.
E)an asset account and an expense account.

Question

Quizplus · Accepted Answer

An adjusting entry typically involves a balance sheet account (such as prepaid expenses or accrued liabilities) and an income statement account (such as rent expense or interest revenue). This is because adjusting entries are meant to ensure that the company's financial statements accurately reflect the current period's revenue and expenses, as well as the assets and liabilities that relate to those revenues and expenses. Therefore, options A, B, D, and E are incorrect.

An Adjusting Entry Must Contain