Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 21 - No. 38)
Which of the following is the typical effect of an adjusting entry on the financial statements?
It will increase both assets and liabilities.
It will update the revenue and expense accounts.
It will increase the cash balance.
It will change the amount of owners' equity.
Explanation
Adjusting entries mainly update the revenue and expense accounts to comply with the matching principle.
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