Pick a type and read what happens if December 31 comes and goes without it.
| Before adjusting | Asset overstated; expense understated |
|---|---|
| Adjusting entry | Dr. Expense · Cr. Asset (or contra asset) |
Skip (a): Prepaid Insurance stays at 2,400 instead of 2,300; Insurance Expense shows 0 instead of 100.
Each adjustment fixes one balance sheet account and one income statement account, so skipping it leaves both wrong in a fixed direction. Deferrals left alone overstate an asset or a liability. Accruals left alone understate one. Either way, the miss runs straight through net income and into equity — the fast check on an exam is to ask which side of the equation is wrong before adjusting, and which way.