Under the traditional rules of accounting, which entry is made for an increase in an asset account?
Correct answer: A. Debit the asset account
- A. Debit the asset account
- B. Credit the asset account
- C. Debit the capital account
- D. Credit the expense account
Explanation
Assets are real accounts, and the traditional rule is to debit what comes into the business. Thus, an increase in an asset account is recorded on the debit side.
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About Ledger Accounts and the Trial Balance
Ledger accounts collect transactions under individual headings and use debit and credit sides to determine balances. The trial balance lists those balances to check arithmetical agreement before financial statements are prepared, but it does not reveal every error, such as complete omission, compensating errors or entries made in the wrong account.
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