Which of the following does not correctly describe an adjusting journal entry that debits rent expense and credits prepaid rent?
A)The entry increases expenses and decreases stockholders' equity.
B)The entry decreases net income and decreases assets.
C)The entry increases expenses and decreases current assets.
D)The entry decreases net income and decreases liabilities.

Question

Quizplus · Accepted Answer

An adjusting journal entry that debits rent expense and credits prepaid rent would decrease current assets and increase expenses, which would decrease net income. However, it would not decrease liabilities.

Which of the Following Does Not Correctly Describe an Adjusting