If the Effect of the Credit Portion of an Adjusting

question 57

Multiple Choice

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

• A) increases the balance of a contra asset account
• B) increases the balance of an asset account
• C) decreases the balance of an owner's equity account
• D) increases the balance of an expense account

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Definitions:

Switching Costs

The costs that a consumer incurs as a result of changing brands, suppliers, or products, which can include financial costs, time, and effort.

Preemptive Practices

Strategies or actions taken by a business to prevent competitors from entering their market or to gain an advantage over them.

Small Businesses

Companies with limited revenue and staff, playing a vital role in the economy by providing localized services and innovations.

Private-Sector Employees

Refers to individuals who are employed by businesses or organizations that are not owned or operated by the government.