Adjusting entries:
A) Affect only income statement accounts.
B) Affect only balance sheet accounts.
C) Affect both income statement and balance sheet accounts.
D) Affect only cash flow statement accounts.
E) Affect only equity accounts.

Question

Quizplus · Accepted Answer

Adjusting entries are made at the end of the accounting period to ensure that the income statement and balance sheet reflect the most accurate and up-to-date financial information. These entries can affect both income statement accounts, such as revenue and expenses, and balance sheet accounts, such as assets and liabilities. Therefore, the best choice is C, as adjusting entries affect both income statement and balance sheet accounts.

Adjusting Entries