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:

Accounts Receivable

Unsettled customer debts for goods and services a company has delivered but has not received payment for.

Accounts Payable

A bookkeeping record indicating a business's responsibility to settle a short-term financial liability with its lenders or vendors.

Marketable Securities

Financial instruments and assets that can be easily converted into cash, typically with a maturity of less than one year.

Warranty Expense

Costs that a company expects to incur under its product warranty promises, recognized as a liability at the time of sale.