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

Question

Quizplus · Accepted Answer

Debiting Insurance Expense, which is an expense account, and crediting Cash, which is an asset account, would reduce stockholders' equity since expenses decrease equity and assets increase or decrease equity depending on the type of account.

Which of the Following Journal Entries Would Decrease Stockholders' Equity