An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense. Which of the following best completes the definition?

• A. balances
• B. credits
• C. transactions
• D. decreases

Answer: (D)

Verified step by step guidance

1. Step 1: Begin by understanding the definition of an account in Financial Accounting. An account is a record used to track increases and decreases in specific categories such as assets, liabilities, equity, revenue, or expenses.
2. Step 2: Analyze the options provided: 'balances,' 'credits,' and 'transactions.' Consider how each term relates to the definition of an account.
3. Step 3: Recognize that 'balances' refer to the net amount in an account after considering all increases and decreases, but they do not directly complete the definition of an account.
4. Step 4: Understand that 'credits' are one side of a transaction in double-entry accounting, but they do not encompass the full concept of increases and decreases in an account.
5. Step 5: Identify that 'transactions' are the events that cause changes in accounts, including both increases and decreases, making 'transactions' the best fit to complete the definition.