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If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following statements describes the effect of the debit portion of the entry? A. Increases the balance of a revenue account. B. Increases the balance of an expense account. C. Increases the balance of an asset account.

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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663

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Chapter
Section
BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
Publisher: Cengage Learning,
ISBN: 9781337902663
Chapter 3, Problem 7DQ
Textbook Problem
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If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following statements describes the effect of the debit portion of the entry?

  1. A. Increases the balance of a revenue account.
  2. B. Increases the balance of an expense account.
  3. C. Increases the balance of an asset account.

To determine

Identify the effect of the debit and credit portion of adjusting entry.

Explanation of Solution

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle.  All adjusting entries affect at least one income statement account (revenue or expense), and one balance sheet account (asset or liability).

Rule of Debit and Credit:

Debit - Increase in all assets, expenses & dividends, and decrease in all liabilities and stockholders’ equity.

Credit - Increase in all liabilities and stockholders’ equity, and decrease in all assets & expenses.

DateDescription

Post

 Ref.

Debit

($)

Credit

($)

XXXExpenses XXXX 
              �...

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Chapter 3 Solutions

Financial And Managerial Accounting
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