The Effect of Adjustments on the Accounting Equation Determine whether recording each of the following adjustments will increase (I), decrease (D), or have no effect (NE) on each of the three elements of the accounting equation.

Assets = Liabilities + Stock. Equity Example: Wages earned during the period but not yet paid are accrued. NE I D 1. Prepaid insurance is reduced for the portion of the policy that has expired during the period. _______ _______ _______ 2. Interest incurred during the period but not yet paid is accrued. _______ _______ _______ 3. Depreciation for the period is recorded. _______ _______ _______ 4. Revenue is recorded for the earned portion of a liability for amounts collected in advance from customers. _______ _______ _______ 5. Rent revenue is recorded for amounts owed by a tenant but not yet received. _______ _______ _______ 6. Income taxes owed but not yet paid are accrued. _______ _______ _______ AppendixLO1