Which of the following does not correctly describe the follo

Which of the following does not correctly describe the following adjusting journal entry?

(a) Total assets increase.

(b) The transaction is an example of an accrual.

(c) Stockholders\' equity decreases.

(d) Net income increases.

Solution

Answer is Option D, because as per golden rules of accounting, Debit All Expenses And Losses, Credit All Incomes And Gains. Since interest revenue is income and it is credited, how can it decrease net income. Thus option D is wrong and it does not correctly describe the following adjusting journal entry.

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