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

Question

Quizplus · Accepted Answer

If the debit portion of an adjusting entry increases the balance of an expense account, then the credit portion of the entry will decrease the balance of a related account. In this case, the related account would be a liability account. This is because expenses are typically incurred but not yet paid, creating a liability that is typically paid off later. Therefore, the credit portion of the entry would increase the balance of the liability account, reflecting the amount owed for the expense.

If the Effect of the Debit Portion of an Adjusting