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 credit portion of the entry?
a.increases the balance of an asset account
c.decreases the balance of an asset account
c.increases the balance of an expense account
2006-11-06 10:47:03 · 6 answers · asked by thefishbag 2 in Business & Finance ➔ Other - Business & Finance
It's not a. because a credit decreases an asset. It's not c. because a credit decreases an expense. Must be b. a credit reduces an asset - could be cash or a prepaid expense.
2006-11-06 12:07:43 · answer #1 · answered by porkchop 5 · 0⤊ 1⤋
If you increase the balance of an expense account, you either increase the balance of a liability account or decrease the balance of an asset account. Therefore the answer is b.
2006-11-07 06:25:34 · answer #2 · answered by potatochip 7 · 0⤊ 1⤋
The second answer is the correct one although it's a poor question because it is assuming it is a transaction like paying an expense out of a cash account but there are other possibilities when you are debiting expenses.
2006-11-10 01:41:26 · answer #3 · answered by S 2 · 0⤊ 0⤋
b. decreases the balance of an asset account.
Assumes purchases (expenses) are bought with cash (assets) and a debit to expenses would indicate a credit to cash.
2006-11-06 11:12:00 · answer #4 · answered by Angela 2 · 1⤊ 1⤋
I think the answer is the second choice .. decreases the balance of an asset account.
2006-11-06 11:10:45 · answer #5 · answered by tootsie wildhair 1 · 0⤊ 1⤋
B.
2006-11-06 10:51:08 · answer #6 · answered by Joe S 6 · 0⤊ 0⤋