Final answer:
The correct statement about the role of cash in adjusting entries is that adjusting journal entries do not affect the cash account, as they are made for income and expenses that have been earned or incurred but not yet realized in cash. Thus, the correct answer to the student's question is: (b) Adjusting journal entries do not affect the cash account.
Step-by-step explanation:
The question concerns the role of cash in adjusting entries within the context of financial accounting and reporting. According to accounting principles, adjusting journal entries are often made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.
The correct statement about these entries related to cash is that:
Adjusting journal entries do not affect the cash account
This is because adjusting entries are made to record revenues earned or expenses incurred that have not yet been recorded by the end of the accounting period and do not involve cash transactions at the time of adjustment.
For instance, if a company earns interest on a bank account, but the cash has not been received by the end of the accounting period, an adjusting entry must be made to record the revenue. However, no cash has actually changed hands yet, so the cash account is not affected.