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

Question

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

Quizplus · Accepted Answer

The journal entry mentioned in the question results in a decrease in the liability account, which means that stockholders' equity would increase instead of decreasing. Therefore, option C does not correctly describe the journal entry. Options A, B, and D correctly describe the journal entry.

Which of the Following Does Not Correctly Describe the Following