Practice question · Multiple choice
Every adjusting entry touches one balance-sheet account and one income account, never two of either. Why does that pattern hold?
Hints
- Ask what an accrual is DOING to the timing of an amount.
- Which statement reports a period, and which reports a moment?
Show the answer
A. Because each adjustment moves an amount between periods
Why
Adjustments exist to move amounts into the right period. Recognition is the income side, and the residual claim or duty is the balance-sheet side, one of each, always.
Practise Adjusting Entries
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More questions on Adjusting Entries
- Adjusting entries are made at period-end and never involve cash. Why is that the defining feature?
- A company receives 12,000 on October 1 for a one-year service contract. By December 31, how much revenue…
- Which adjustments create or increase a liability?
- The matching principle says expenses should be recorded in the same period as the revenues they helped…
- Complete the adjustment logic.
- Accrual or deferral? Sort each adjusting entry.
- Match each adjustment type to its journal entry.