Asked by Sophie Hansen on Jul 12, 2024
Verified
Adjusting entries always include
A) only income statement accounts
B) only balance sheet accounts
C) the cash account
D) at least one income statement account and one balance sheet account
Adjusting Entries
Journal entries made at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.
Income Statement
A financial statement that reports a company's financial performance over a specific accounting period, detailing revenue, expenses, and net income or loss.
Balance Sheet
A document detailing a firm's assets, liabilities, and owners' equity at a particular moment, offering an overview of its financial health.
- Understand the significance and consequences of making adjustments in financial statements.
- Identify the effects of making adjusting entries on the balance sheet and income statement.
Verified Answer
VW
Vivette WatsonJul 19, 2024
Final Answer :
D
Explanation :
Adjusting entries are made at the end of the accounting period to update the accounts and ensure that the financial statements are accurate. They typically involve at least one income statement account (such as revenue or expenses) and one balance sheet account (such as assets or liabilities). Therefore, the correct choice is D. Adjusting entries may or may not involve the cash account, depending on the nature of the adjustment.
Learning Objectives
- Understand the significance and consequences of making adjustments in financial statements.
- Identify the effects of making adjusting entries on the balance sheet and income statement.