Each adjusting entry will always affect __________.

Question

only the balance sheet accounts

at least one balance sheet account and one income statement account

only the income statement accounts

at least one income statement account and one retained earnings statement account

Answer 1

Each adjusting entry will always affect at least one balance sheet account and one income statement account. This is because adjusting entries are made to ensure that revenues and expenses are recognized in the period in which they occur, aligning earnings with the corresponding assets or liabilities on the balance sheet.