Absolutely. The adjusting entry amounts must be included on the income statement in order to report all revenues earned and all expenses incurred during the accounting period indicated on the income statement. The adjusting entry amounts must also be included in the amounts reported on the balance sheet as of the end of the accounting period.
In the following accounting period, the accrual-type adjusting entries will usually be reversed. They are reversed or removed because the actual invoices or other documents containing the accrued revenues or expenses will be arriving and will be entered into the accounting records by the bookkeeper or the accounts payable clerk.
