Which of the following accounts increases with a credit?

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

Answer: (A)

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. Each type of account has a normal balance side, which determines whether it increases with a debit or a credit.
2. Analyze the accounts listed: Accounts Payable is a liability account, Equipment is an asset account, Cash is an asset account, and Prepaid Expenses is also an asset account.
3. Recall the normal balance rules: Liability accounts (like Accounts Payable) and Equity accounts increase with a credit, while Asset and Expense accounts increase with a debit.
4. Apply the rules to the given accounts: Since Accounts Payable is a liability account, it increases with a credit. Equipment, Cash, and Prepaid Expenses are asset accounts, so they increase with a debit.
5. Conclude the correct answer: Based on the analysis, the account that increases with a credit is Accounts Payable.