If the Effect of the Debit Portion of an Adjusting

question 49

Multiple Choice

If the effect of the debit portion of an adjusting entry is to increase the balance of an expense account,which of the following describes the effect of the credit portion of the entry?

• A) decreases the balance of an stockholders' equity account
• B) increases the balance of a liability account
• C) increases the balance of an asset account
• D) decreases the balance of an expense account

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Definitions:

Income Before Taxes

The total revenue of a company minus all expenses except for income tax expenses.

Current Ratio

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business’s operating cycle if longer than a year.

Current Liabilities

Obligations or debts that a company must pay within a year or within its operating cycle.