Which rule correctly describes the normal effect of a debit entry?
Correct answer: A. It increases assets and expenses
- A. It increases assets and expenses
- B. It increases liabilities and income
- C. It decreases assets and expenses
- D. It decreases liabilities and capital
Explanation
Debits normally increase asset and expense accounts. Debits reduce liabilities, capital and income, so the other combinations reverse the usual rules.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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