21. If the adjusting entry for depreciation is made, A) assets will be decreased. B) owner's equity will be increased C) net income will be increased. D) expenses will be decreased. 22. An adjusting entry A) affects two balance sheet accounts. B) affects two income statement accounts. C) affects a balance sheet account and an income statement account D) is always a compound entry. 23. Buffalo Tom Cruises purchased a five-year insurance poliey for its ships on April 1, 2012 for $50,000. Assuming that April 1 is the effective date of the policy, the adjusting entry on December 31, 2012 is A) Prepaid Insurance 7,500 7,500 Insurance Expense Prepaid Insurance Prepaid Insurance 7,500 B) Insurance Expense C) Insurance Expense D) Insurance Expense 7,500 10,000 10,000 2,500 Prepaid Insurance 2,500 24. Ryan Adams, an employee of Heartbreaker Corp., will not receive her paycheek until April 2. Based on services performed from March 15 to March 31, his salary -was $1,000. The adjusting entry for Heartbreaker Corp. on March 31 is A) Salaries Expense 1,000 Salaries Payable 1,000 B) No entry is required. C) Salaries Expense 1,000 Cash 1,000 D) Salaries Payable 1,000 Cash 1,000