If the effect of the debit portion of an adjusting entry is to increase the balance of an asset account, which of the following describes the effect of the credit portion of the entry?
A) increases the balance of a revenue account
B) decreases the balance of a liability account
C) increases the balance of an expense account
D) decreases the balance of a revenue account

Question

Quizplus · Accepted Answer

Adjusting entries are made to record revenues that have been earned but not yet recorded, or expenses that have been incurred but not yet recorded. If the debit portion increases an asset, it typically means that an expense has been incurred but not yet paid (prepaid expenses are adjusted differently). Therefore, the credit portion would increase a revenue account to reflect earned revenue that has not yet been recorded.

If the Effect of the Debit Portion of an Adjusting