Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

Which of the following types of accounts are decreased by debits and increased by credits?

Asset accounts

Dividend accounts

Liability accounts

Expense accounts

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Verified step by step guidance

Understand the basic rules of debits and credits: In accounting, debits and credits are used to record transactions. Debits increase asset and expense accounts, while credits decrease them. Conversely, credits increase liability, equity, and revenue accounts, while debits decrease them.

Identify the type of account being asked about: The question is asking about liability accounts, which are part of the balance sheet and represent obligations owed by the company.

Recall the behavior of liability accounts: Liability accounts are increased by credits because they represent amounts owed, and decreased by debits when the company fulfills or reduces its obligations.

Compare liability accounts to other account types: Asset accounts and expense accounts are increased by debits and decreased by credits, while liability accounts behave oppositely. This distinction is crucial for understanding the accounting equation.

Apply the rule to the question: Since liability accounts are increased by credits and decreased by debits, they are the correct answer to the question. This aligns with the fundamental principles of double-entry accounting.