Which one of the following best describes the characteristics of adjusting entries?

Multiple Choice

Adjusting entries reduce the balance of revenue, expense, and dividend accounts to zero.

Adjusting entries update the balances of assets and liabilities $($and their related revenues and expenses$).$

$$ Adjusting entries update balances for the recognition of investments from and distributions to stockholders.

$$ Adjusting entries update balances for the recognition of cash flows.