If the Effect of the Debit Portion of an Adjusting

question 29

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 a 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:

Order Size

The quantity of goods a customer requests in a single purchase transaction.

Economic Order Quantity

A deterministic inventory model that determines the optimal order quantity minimizing total inventory costs, including holding and ordering costs.

Total Annual Cost

The total amount spent on specific activities or operations, including both fixed and variable costs, over the course of a year.

Holding Costs

The expenses associated with storing inventory, including warehousing, insurance, depreciation, and opportunity costs of keeping stock.