If the Effect of the Credit Portion of an Adjusting

question 60

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 asset account
• D) Increases the balance of an expense account

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Definitions:

Break-even Analysis

A financial calculation to determine the point at which revenue received equals the costs associated with receiving the revenue.

Total Revenue

Total revenue is the complete amount of money earned by a business from its sales of goods or services, before any expenses are subtracted.

Total Cost

The entirety of costs involved in the production, delivery, and sale of a product or service, including fixed and variable expenses.

Break-even Quantity

The number of units that must be sold to cover all costs, resulting in neither profit nor loss.