Which of the following accounts increases with a credit?

• A. Cash
• B. Prepaid Expenses
• C. Inventory
• D. Accounts Payable

Answer: (D)

Verified step by step guidance

1. Understand the concept of debit and credit: In accounting, accounts are classified into five categories: Assets, Liabilities, Equity, Revenue, and Expenses. Assets and Expenses typically increase with a debit, while Liabilities, Equity, and Revenue typically increase with a credit.
2. Analyze the accounts listed: Cash, Prepaid Expenses, and Inventory are all asset accounts. Asset accounts increase with a debit and decrease with a credit.
3. Focus on Accounts Payable: Accounts Payable is a liability account. Liability accounts increase with a credit and decrease with a debit.
4. Compare the behavior of the accounts: Since Cash, Prepaid Expenses, and Inventory are asset accounts, they do not increase with a credit. Accounts Payable, being a liability account, increases with a credit.
5. Conclude the reasoning: Based on the classification and behavior of accounts, Accounts Payable is the correct answer because it is the only account listed that increases with a credit.