Which of the following correctly describes the following adjusting journal entry?
A)Total assets do not change.
B)The transaction is an example of an accrual.
C)Stockholders' equity decreases.
D)Net income is not affected.

Question

Which of the following correctly describes the following adjusting journal entry? 
A)Total assets do not change. 
B)The transaction is an example of an accrual. 
C)Stockholders' equity decreases. 
D)Net income is not affected.

Quizplus · Accepted Answer

Since the given transaction is an adjusting journal entry, it is an example of an accrual. Accruals are adjustments made to recognize revenue or expenses that have been earned or incurred, but not yet recorded. Therefore, option B is the correct choice. Total assets, stockholders' equity and net income may be affected depending on the specific transaction, but we cannot determine that from the given information.

Which of the Following Correctly Describes the Following Adjusting Journal