Which of the following is an example of an accrual adjusting entry?

An accrual adjusting entry involves recording revenues and expenses that have been incurred but not yet recognized in the financial statements. This typically happens when cash has not yet been exchanged but the economic event has already occurred.

In the case of accrued wages payable, this entry reflects the wages that employees have earned for work performed but have not yet been paid by the end of the accounting period. This means that the expense needs to be accrued to accurately represent the company’s liabilities and expenses within that period, ensuring that the financial statements present a true and fair view of the company's financial position.

While prepaid rent involves payments made in advance and is thus a deferral entry rather than an accrual, a sale made on credit does not qualify as an accrual entry since revenue is recognized at the time of the sale. Depreciation expense, while it involves an allocation of an asset's cost over time, is not classified as an accrual entry for the purposes of recognizing expenses incurred but not yet paid. The key point is that an accrual entry like accrued wages reflects obligations that arise from the operations of the business within the specified period, aligning revenue and expenses with the period they pertain to.