An Adjusting Entry

question 127

Multiple Choice

An adjusting entry

• A) affects two balance sheet accounts.
• B) affects two income statement accounts.
• C) affects a balance sheet account and an income statement account.
• D) is always a compound entry.

---

Definitions:

Carrying Amount

The net value of an asset or liability as presented on the balance sheet, accounting for factors like depreciation or amortization where applicable.

Accrual Basis

Accrual Basis is an accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash is received or paid.

Expenses Recognized

Costs that have been incurred in an accounting period and are matched with revenues in the same period, affecting a company's income statement.

Expenses Paid

Outflows or other using-up of assets or incurring of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity’s ongoing major operations.