Which of the Following Does Not Correctly Describe an Adjusting

question 98

Multiple Choice

Which of the following does not correctly describe an adjusting journal entry that debits interest expense and credits interest payable?

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

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Definitions:

Fees Earned

Revenue generated from services provided or work performed, often used in the context of professional services like legal or consulting firms.

Office Supplies Expense

Office supplies expense is the cost associated with purchasing supplies used in the daily operations of an office, such as paper, pens, and ink cartridges.

Interest Revenue

The income earned from lending money or through investments in interest-bearing financial instruments.

Accounts Payable

Liabilities owed to suppliers or creditors for goods and services received that have not yet been paid for.