Which of the following journal entries would decrease stockholders' equity?
A)Debit Prepaid Insurance and credit Cash.
B)Debit Deferred Revenue and credit Service Revenue.
C)Debit Supplies and credit Accounts Payable.
D)Debit Insurance Expense and credit Cash.

Question

Quizplus · Accepted Answer

Revenues increase net income,which increases the stockholders' equity account Retained Earnings.Expenses decrease net income,which decreases the stockholders' equity account Retained Earnings.As a result,expenses are increased with debits.An entry that includes a debit to an expense account would decrease stockholders' equity.

Which of the Following Journal Entries Would Decrease Stockholders' Equity