Multiple Choice
Javier needs to add month-end accruals to his company's books. Which QuickBooks function would be most useful for recording these accruals as journal entries?
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2. Transaction Analysis
Journal Entries: Debits and Credits
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following accounts increases with a credit?
A
Accounts Payable
B
Equipment
C
Cash
D
Prepaid Expenses
Verified step by step guidance1
Understand the concept of debit and credit: In accounting, accounts are classified into five categories: Assets, Liabilities, Equity, Revenue, and Expenses. Each type of account has a normal balance side, which determines whether it increases with a debit or a credit.
Analyze the accounts listed: Accounts Payable is a liability account, Equipment is an asset account, Cash is an asset account, and Prepaid Expenses is also an asset account.
Recall the normal balance rules: Liability accounts (like Accounts Payable) and Equity accounts increase with a credit, while Asset and Expense accounts increase with a debit.
Apply the rules to the given accounts: Since Accounts Payable is a liability account, it increases with a credit. Equipment, Cash, and Prepaid Expenses are asset accounts, so they increase with a debit.
Conclude the correct answer: Based on the analysis, the account that increases with a credit is Accounts Payable.
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