The impact of adjusting journal entries on the accounting equation . Introduction: The financial statements of a company include balance sheets , income statements, and cash flow statements. All these statements help the internal and external users of financial statements help in analyzing and concluding the financial position of the respective company. The impact of adjusting journal entries on the accounting equation has been stated below: S. No. Account name Amount Impact on accounting equation a. Wages expense Wages payable +$8,000 +$8,000 Increase b. Depreciation expense Accumulated depreciation +$18,000 +$18,000 No impact c. Supplies expense Supplies +$5,000 -$5,000 Decrease d. Insurance expense Prepaid insurance +$4,000 -$4,000 Decrease e. Interest revenue Accounts receivable +$1,050 -$1,050 Increase f. Interest expense Interest payable +$2,500 -$2,500 Decrease

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