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:

Current Assets

Current assets are assets that are expected to be converted into cash, sold or consumed within a year or within the normal operating cycle of the business, such as cash, inventory, and receivables.

Installation

refers to the process of setting up and configuring equipment or software to make it ready for use.

Repairs

Expenditures to restore or maintain an asset in its normal operating condition without significantly improving its life or value.

Machine

An equipment or apparatus designed to perform a specific task, often powered by electricity or mechanical energy.