Multiple Choice
Which of the following is a contra-asset account?
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1. Introduction to Accounting
Types of Accounting
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A credit is used to decrease which of the following types of accounts?
A
Liability accounts
B
Asset accounts
C
Revenue accounts
D
Equity accounts
Verified step by step guidance1
Understand the concept of a credit in accounting: A credit is an entry that increases liabilities, revenues, and equity accounts, but decreases asset and expense accounts.
Review the types of accounts listed in the problem: Liability accounts, Asset accounts, Revenue accounts, and Equity accounts.
Recall that asset accounts are decreased by credits, as they represent resources owned by the company, and a credit entry reduces the value of these resources.
Compare the behavior of credits with the other account types: Credits increase liability accounts, revenue accounts, and equity accounts, so they do not decrease these types of accounts.
Conclude that the correct answer is asset accounts, as credits are used to decrease their balances.
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