Which of the following accounts should never be used in Adjusting Journal Entries?

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Study for the Texas Aandamp;M University (TAMU) ACCT229 Exam. Get exam-ready with flashcards, detailed explanations, and multiple choice questions. Enhance your understanding and boost your confidence!

In accounting, adjusting journal entries are made to ensure that revenues and expenses are recorded in the correct accounting period, following the accrual basis of accounting. The cash account is not used in adjusting journal entries because these entries are meant to adjust items that have accrued over time or to align recognition of revenue and expenses with the periods they pertain to, rather than actual cash transactions.

The cash account typically reflects transactions related to the receipt or payment of cash. Since adjusting entries primarily deal with non-cash items, such as accrued expenses, prepaid expenses, or unearned revenues, using the cash account does not align with the purpose of adjustments. Thus, it is not appropriate to involve the cash account in these types of entries, as this would contradict the accrual accounting principle where the focus is on when the economic events occur rather than when cash is exchanged.

In contrast, expense accounts, revenue accounts, and liability accounts are often adjusted to reflect the accrued or deferred amounts that need to be recognized for accurate financial reporting.