Which of the following correctly describes the following adjusting journal entry?
A)Total assets decrease.
B)Liabilities will increase.
C)Stockholders' equity is not affected.
D)Net income increases.

Question

Which of the following correctly describes the following adjusting journal entry? 
A)Total assets decrease. 
B)Liabilities will increase. 
C)Stockholders' equity is not affected. 
D)Net income increases.

Quizplus · Accepted Answer

The adjusting journal entry mentioned in the question is not specific, but in general adjusting entries are made to ensure accurate financial statements at the end of an accounting period. One common adjustment is to record expenses that have been incurred but not yet paid or recorded. This type of adjustment would decrease total assets and increase expenses, resulting in a decrease in net income. Therefore, the correct choice is A as it describes the decrease in total assets that may occur with an adjusting entry.

Which of the Following Correctly Describes the Following Adjusting Journal