medium · Financial Accounting accounting-cycle-financial-statements
At year-end, a firm identifies that it has $800 of interest earned on its bank savings account that has not yet been recorded.
What is the effect of the adjusting entry on the accounting equation?
- Assets increase $800; Liabilities increase $800
- Liabilities decrease $800; Equity increases $800
- Assets increase $800; Equity increases $800
- No effect, because the cash has not been received.
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