In financial accounting, which of the following accounts normally increases with a credit?

• A. Accounts Receivable
• B. Prepaid Insurance
• C. Cash
• D. Accounts Payable

Answer: (D)

Verified step by step guidance

1. Understand the basic accounting equation: Assets = Liabilities + Equity. Accounts are classified into these categories.
2. Identify the nature of each account: Accounts Receivable, Prepaid Insurance, and Cash are asset accounts, while Accounts Payable is a liability account.
3. Recall the rule for debits and credits: Asset accounts normally increase with debits and decrease with credits, whereas liability accounts normally increase with credits and decrease with debits.
4. Apply this rule to each account: Since Accounts Payable is a liability, it normally increases with a credit, unlike the asset accounts listed which increase with debits.
5. Conclude that among the options given, Accounts Payable is the account that normally increases with a credit.