Which of the following does not correctly describe the following adjusting journal entry?
A)Total assets do not change.
B)The transaction is an example of an accrual.
C)Stockholders' equity decreases.
D)Net income is not affecteD.This journal entry increases expenses and liabilities; the increase in expenses decreases net income, retained earnings, and thus stockholders' equity.

Question

Which of the following does not correctly describe the following adjusting journal entry? 
A)Total assets do not change. 
B)The transaction is an example of an accrual. 
C)Stockholders' equity decreases. 
D)Net income is not affecteD.This journal entry increases expenses and liabilities; the increase in expenses decreases net income, retained earnings, and thus stockholders' equity.

Quizplus · Accepted Answer

The statement "Net income is not affected" is incorrect. This adjusting journal entry increases expenses, which decreases net income.

Which of the Following Does Not Correctly Describe the Following