How will the following adjusting journal entry affect the accounting equation?
A) increase assets, increase revenues
B) increase liabilities, increase revenues
C) decrease liabilities, increase revenues
D) decrease liabilities, decrease revenues

Question

How will the following adjusting journal entry affect the accounting equation? 
A) increase assets, increase revenues 
B) increase liabilities, increase revenues 
C) decrease liabilities, increase revenues 
D) decrease liabilities, decrease revenues

Quizplus · Accepted Answer

This adjusting entry will decrease liabilities (by reducing the amount owed to customers for services already provided) and increase revenues (by recognizing the revenue earned for the previously performed services). Therefore, choice C, decrease liabilities and increase revenues, is the correct answer.

How Will the Following Adjusting Journal Entry Affect the Accounting