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 debit portion of the entry?
A) increases the balance of a contra expense account
B) increases the balance of a stockholders' equity account
C) decreases the balance of an asset account
D) decreases the balance of a liability account

Question

Quizplus · Accepted Answer

When a debit is used to increase the balance of an expense account, it means that expenses have been incurred and need to be recognized in the accounting records. Since expenses are reducing factors in relation to the net income, their recognition through a debit entry will decrease the balance of an asset account or increase the balance of a liability account, depending on the nature of the transaction. However, it is generally unlikely that the debit portion of an adjusting entry for expenses would affect a contra expense account or a stockholders' equity account.

If the Effect of the Debit Portion of an Adjusting