Which of the Following Doesn't Correctly Describe a Journal Entry

question 132

Multiple Choice

Which of the following doesn't correctly describe a journal entry which debits interest expense and credits interest payable?

• A)It increases expenses and decreases retained earnings.
• B)It decreases net income and decreases stockholders' equity.
• C)It increases expenses and increases liabilities.
• D)It decreases assets and decreases stockholders' equity.

---

Definitions:

Revenue Expenditure

Costs that are expensed in the income statement in the period in which they are incurred, typically related to the day-to-day operating expenses.

New Engine

A recently manufactured or developed engine, often implying improvements or advancements over previous models.

Delivery Vehicle

A category of fixed assets that refers to transportation equipment used by a business for the purpose of delivering goods or services.

Book Value

The net value of a company's assets found on its balance sheet, calculated as total assets minus intangible assets and liabilities.