Which of the following correctly describes the following adjusting journal entry?
A)Total assets decrease.
B)Liabilities will increase.
C)Stockholders' equity is not affected.
D)Net income increases.

Question

Which of the following correctly describes the following adjusting journal entry? 
A)Total assets decrease. 
B)Liabilities will increase. 
C)Stockholders' equity is not affected. 
D)Net income increases.

Quizplus · Accepted Answer

An adjusting entry that decreases an asset account will result in a decrease in total assets, which is option A. Option B is incorrect because a decrease in an asset account does not impact liabilities. Option C is incorrect because any adjustment to an asset account (which impacts total assets) will also impact stockholders' equity. Option D is incorrect because a decrease in an asset account will result in a decrease in net income, not an increase.

Which of the Following Correctly Describes the Following Adjusting Journal