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Which of the following is possible for a particular business transaction in terms of debits and credits?
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2. Transaction Analysis
Journal Entries: Debits and Credits
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A debit is used to record which of the following?
A
An increase in a revenue account
B
A decrease in an expense account
C
An increase in a liability account
D
An increase in an asset account
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Understand the concept of debits and credits: In accounting, debits and credits are used to record changes in accounts. A debit entry typically increases asset and expense accounts, while it decreases liability, equity, and revenue accounts.
Analyze the options provided: Review each option to determine whether it aligns with the general rules of debits and credits.
Option 1: 'An increase in a revenue account' - Revenue accounts are increased by credits, not debits. Therefore, this option is incorrect.
Option 2: 'A decrease in an expense account' - Expense accounts are decreased by credits, not debits. This option is also incorrect.
Option 3: 'An increase in a liability account' - Liability accounts are increased by credits, not debits. This option is incorrect. The correct answer is 'An increase in an asset account,' as asset accounts are increased by debits.
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