Multiple Choice
When recording a bill received from a supplier, which account is typically credited in the journal entry?
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2. Transaction Analysis
Journal Entries: Debits and Credits
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Which of the following debit and credit rules is correct?
A
Debiting a liability account increases its balance.
B
Debiting an asset account increases its balance.
C
Crediting a revenue account decreases its balance.
D
Crediting an expense account increases its balance.
Verified step by step guidance1
Understand the basic rules of debits and credits in accounting: Debits increase asset and expense accounts, while credits increase liability, equity, and revenue accounts.
Analyze the first statement: 'Debiting a liability account increases its balance.' This is incorrect because debiting a liability account decreases its balance.
Evaluate the second statement: 'Debiting an asset account increases its balance.' This is correct because debits increase asset accounts.
Examine the third statement: 'Crediting a revenue account decreases its balance.' This is incorrect because credits increase revenue accounts.
Review the fourth statement: 'Crediting an expense account increases its balance.' This is incorrect because credits decrease expense accounts.
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