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Why do adjusting entries never impact the cash account?

Record-to-Report (R2R) · Article FAQ

Detailed Explanation

Adjusting entries update revenues and expenses under the accrual basis of accounting at period end. Because cash exchanges have either already occurred (prepayments) or have not yet occurred (accruals), adjusting entries adjust asset, liability, revenue, and expense accounts without touching the cash balance.

Disclaimer: This material is for educational purposes only. Every financial situation is unique. Consult with a certified professional before making significant decisions.