How will the following adjusting journal entry affect the accounting equation?

A)increase assets,increase revenues
B)increase liabilities,increase revenues
C)decrease liabilities,increase revenues
D)decrease liabilities,decrease revenues

Question

How will the following adjusting journal entry affect the accounting equation?

A)increase assets,increase revenues 
B)increase liabilities,increase revenues 
C)decrease liabilities,increase revenues 
D)decrease liabilities,decrease revenues

Quizplus · Accepted Answer

This entry will decrease liabilities (by reducing the amount owed to the insurance company) and increase revenues (by recognizing the portion of insurance expense that has been earned during the period). This would result in the accounting equation being more balanced.

How Will the Following Adjusting Journal Entry Affect the Accounting