If the Effect of the Debit Portion of an Adjusting

question 187

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 debit portion of the entry?

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

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Definitions:

Supply Equation

A mathematical representation that describes the relationship between the price of a good and the quantity of the good that suppliers are willing to sell.

Price Floor

A regulatory measure that sets the lowest legal price for a good or service to prevent market prices from dropping below a specified level, ensuring producers' welfare.

Shortage/Surplus

A shortage occurs when demand exceeds supply, while a surplus happens when supply exceeds demand, both of which can lead to market adjustments.

Demand Equation

A mathematical representation of the relationship between the quantity of a good consumers are willing and able to buy and the good's price.