Which of the following adjusting entries creates a decrease in liabilities? A. Recording depreciation expense B....
Which of the following adjusting entries creates a decrease in liabilities?
A. Recording depreciation expense
B. Recording the amount of expired prepaid insurance
C. accruing unrecorded salaries expense
D. Recording the earned portion of revenue previously collected in advance.
Homework Answers
Solution: Here, option D. is the correct choice.
Because Unearned portion of revenue (i.e. Advance collection) is shown under current liabilities heading in balance sheet and When earned portion of revenue is recorded, 'Deferred revenue' account is debited and 'Revenue' account is credited. Thus, it creates a decrease in liabilities since deferred revenue account has a credit balance and it's being debited here which results decrease in the credit balance of this account.
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Which of the following adjusting entries creates a decrease in
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A. Recording depreciation expense
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best answer explanation
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