Question

Efficient Company does not make reversing entries. Therefore, Efficient would reverse an adjusting entry which:

a. Increased an expense account.
b. Decreased a liability account.
c. Increased an asset account.
d. Decreased a revenue account.

Answer 1

Efficient Company would reverse an adjusting entry that increased an expense account.

Step-by-step explanation:

Reversing entries are made at the beginning of an accounting period to cancel out the effects of adjusting entries made at the end of the previous accounting period. Since Efficient Company does not make reversing entries, they would have to manually reverse any adjusting entry that increased an expense account. So, the correct answer is (a) Increased an expense account.