Which of the following does not correctly describe an adjusting journal entry that debits depreciation expense and credits accumulated depreciation?
A)The entry increases expenses and increases assets.
B)The entry decreases net income and decreases assets.
C)The entry increases expenses and decreases retained earnings.
D)The entry decreases assets and decreases net income.

Question

Quizplus · Accepted Answer

The entry does not increase assets; it records the depreciation of an asset, which decreases the book value of assets by increasing accumulated depreciation (a contra asset account) and increases expenses, thereby reducing net income and retained earnings.

Which of the Following Does Not Correctly Describe an Adjusting