Multiple Choice
When reallocating a transaction among multiple accounting codes, which of the following best describes the correct journal entry process?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
Which of the following T-accounts are increased by credits?
A
Expenses
B
Owner's Equity
C
Assets
D
Liabilities
Verified step by step guidance1
Step 1: Understand the concept of T-accounts. T-accounts are a visual representation of accounts in the ledger, showing debits on the left side and credits on the right side. Each account type behaves differently when debited or credited.
Step 2: Recall the rules of debit and credit for different account types. Assets and expenses increase with debits and decrease with credits, while liabilities, owner's equity, and revenue increase with credits and decrease with debits.
Step 3: Analyze the account 'Expenses'. Since expenses increase with debits, they are decreased by credits. Therefore, expenses are not increased by credits.
Step 4: Analyze the account 'Owner's Equity'. Owner's equity increases with credits and decreases with debits. Therefore, owner's equity is increased by credits.
Step 5: Analyze the account 'Liabilities'. Liabilities increase with credits and decrease with debits. Therefore, liabilities are increased by credits.
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