If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following describes the effect of the debit portion of the entry?
A) increases the balance of a contra asset account
B) increases the balance of an asset account
C) decreases the balance of an owner's equity account
D) increases the balance of an expense account

Question

Quizplus · Accepted Answer

Adjusting entries are made to ensure that revenue and expense accounts are correctly stated. If the credit portion increases a liability, the debit portion often increases an expense account to match the expense incurred to the period it relates, ensuring accurate financial reporting.

If the Effect of the Credit Portion of an Adjusting