Adjusting Journal Entries Impact on Financial Statements
Which two financial statements are always impacted when posting Adjusting Journal Entries? (Choose 2)
9900 Cash on Hand Cost of Goods Sold Projected Expenses Balance Sheet Income Statement
The two financial statements that are impacted when posting Adjusting Journal Entries are the Balance Sheet and the Income Statement.
Explanation: The two financial statements that are always impacted when posting Adjusting Journal Entries are the Balance Sheet and the Income Statement. Adjusting journal entries are made at the end of an accounting period to ensure that expenses and revenues are recorded in the correct period. These entries impact the Balance Sheet by adjusting assets and liabilities, and they impact the Income Statement by adjusting revenues and expenses.
Adjusting Journal Entries are an important part of the accounting process as they ensure that the financial statements accurately reflect the company's financial position and performance. When posting Adjusting Journal Entries, two financial statements are always impacted: the Balance Sheet and the Income Statement.
The Balance Sheet shows the company's assets, liabilities, and equity at a specific point in time. When Adjusting Journal Entries are made, they can impact the Balance Sheet by adjusting the values of assets and liabilities to reflect the correct balances. This ensures that the company's financial position is accurately represented.
The Income Statement, on the other hand, shows the company's revenues, expenses, and net income over a specific period of time. Adjusting Journal Entries can impact the Income Statement by adjusting revenues and expenses to ensure that they are recorded in the correct period. This helps in accurately measuring the company's financial performance for the period.
Overall, posting Adjusting Journal Entries is essential for maintaining the accuracy and integrity of financial statements. It ensures that expenses and revenues are recorded in the correct period, which in turn provides stakeholders with reliable information about the company's financial position and performance.