Question
At the end of the quarter, a company did an adjusting entry to record the fact that $1,000 of Prepaid Advertising had been used up during the quarter.
Which of the following items would be increased by this advertising adjusting entry? (check all that apply)
Net Income
Cost of Goods Sold
Cash
SG&A Expense
Prepaid Advertising
1 point
10.
Question 10
A company borrowe
Which of the following items would be increased by this advertising adjusting entry? (check all that apply)
Net Income
Cost of Goods Sold
Cash
SG&A Expense
Prepaid Advertising
1 point
10.
Question 10
A company borrowe
Answers
GPT-4o mini
When the company makes an adjusting entry to account for the $1,000 of Prepaid Advertising that has been used up during the quarter, the following items will be affected:
1. **Net Income**: Decreased (because SG&A Expense will increase, reducing net income)
2. **SG&A Expense**: Increased (the amount used up is recorded as an expense)
3. **Prepaid Advertising**: Decreased (as the prepaid amount is expensed)
**Not affected**:
- **Cost of Goods Sold**: No impact.
- **Cash**: No impact.
So, the items that would be increased by this advertising adjusting entry are **Net Income (decreased)** and **SG&A Expense (increased)**. However, if the question is asking explicitly about which items are increased following the adjustment, then the answer is **SG&A Expense** only.
1. **Net Income**: Decreased (because SG&A Expense will increase, reducing net income)
2. **SG&A Expense**: Increased (the amount used up is recorded as an expense)
3. **Prepaid Advertising**: Decreased (as the prepaid amount is expensed)
**Not affected**:
- **Cost of Goods Sold**: No impact.
- **Cash**: No impact.
So, the items that would be increased by this advertising adjusting entry are **Net Income (decreased)** and **SG&A Expense (increased)**. However, if the question is asking explicitly about which items are increased following the adjustment, then the answer is **SG&A Expense** only.