A business uses a credit to record which of the following?

• A. An increase in a liability account
• B. A decrease in a revenue account
• C. A decrease in a capital account
• D. An increase in an asset account

Answer: (A)

Verified step by step guidance

1. Understand the concept of 'credit' in accounting: In double-entry accounting, a credit is one side of a transaction that either increases or decreases specific types of accounts. It is important to know which accounts are affected by credits.
2. Recall the rules of debit and credit: Credits increase liabilities, equity, and revenue accounts, while they decrease assets and expenses. This is a fundamental rule in accounting.
3. Analyze the options provided: Evaluate each option to determine whether it aligns with the rule of credits. For example, an increase in a liability account is consistent with the rule that credits increase liabilities.
4. Eliminate incorrect options: For instance, a decrease in a revenue account is not correct because credits increase revenue accounts. Similarly, a decrease in a capital account is incorrect because credits increase equity (capital).
5. Select the correct answer: Based on the analysis, the correct answer is 'An increase in a liability account,' as this aligns with the rule that credits increase liabilities.