No adjusting entry should consist of:
A)A debit to an expense and a credit to an asset.
B)A debit to an expense and a credit to revenue.
C)A debit to an expense and a credit to a liability.
D)A debit to a liability and a credit to revenue.

Question

Quizplus · Accepted Answer

Adjusting entries are made to update the accounts so that they reflect the current financial situation of the company. Expenses are increased and the corresponding asset or liability is adjusted. However, when an adjusting entry debits an expense and credits revenue, it would mean that the company is decreasing its expenses and increasing its revenue, which is incorrect.

No Adjusting Entry Should Consist Of