A credit is used to record a decrease in which of the following types of accounts?

• A. Equity accounts
• B. Asset accounts
• C. Liability accounts
• D. Revenue accounts

Answer: (B)

Verified step by step guidance

1. Understand the concept of debits and credits: In accounting, debits and credits are used to record changes in accounts. A debit increases asset and expense accounts, while a credit decreases them. Conversely, a credit increases liability, equity, and revenue accounts.
2. Identify the type of account being discussed: The problem asks about asset accounts, which are resources owned by a company, such as cash, inventory, and equipment.
3. Recall the effect of a credit on asset accounts: Credits decrease asset accounts because they represent a reduction in the company's resources, such as when cash is paid out or inventory is sold.
4. Compare the effect of credits on other account types: Credits increase liability accounts (e.g., accounts payable), equity accounts (e.g., retained earnings), and revenue accounts (e.g., sales revenue). This helps distinguish the unique behavior of asset accounts.
5. Conclude that a credit is used to record a decrease in asset accounts, as opposed to equity, liability, or revenue accounts, which are increased by credits.