Reference no: EM132690187

Question 1: If the effect of the credit portion of an adjusting entry is to increase the balance of a revenue account, which of the following describes the effect of the debit portion of the entry?

Option 1: increases the balance of a stockholders' equity account

Option 2: decreases the balance of an asset account

Option 3: decreases the balance of a liability account

Option 4: increases the balance of a contra revenue account

Question 2: At the end of the fiscal year, the usual adjusting entry to accrue wages due on the last day of the fiscal period was omitted. Which of the following is true?

Option 1: net income will be overstated for the current year

Option 2: .total assets will be understated at the end of the current year

Option 3: the balance sheet and income statement will be misstated but the statement of stockholders' equity will be correct for the current year

Option 4: total assets and total liabilities will be understated