A debit may signify a(n)

Question

BlackTom AI · Accepted Answer

Reiterating the question: A debit may signify a(n) [decrease in liability accounts].

Option 1: increase in the common stock account. In accounting, common stock is part of shareholders’ equity and typically carries a credit balance. Debiting (not crediting) this account would reduce equity, not increase it. Therefore this statement is incorrect.

Option 2: decrease in liability accounts. This is correct because liabilities normally have credit balances, and a debit reduces those balances. Debits are used to lower amounts owed to creditors, so this option aligns with the standard double-entry rule for liabilities.

Option 3: decrease in asset accounts. Assets normally have debit balances, and debiting an asset increases it. Therefore, a decrease in asset accounts would more likely require a credit, not a debit, making this option incorrect.

Option 4: decrease in the dividends account. The dividends (or distributions) account is a temporary equity account that typically carries a debit balance; recording a dividend increases this account (a debit). A decrease in this account would require a credit, not a debit. Thus this statement is inaccurate.

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Similar Questions

Regardless of the business activity recorded, the left side of an account is the debit side and the right side is the credit side.

The double-entry system of debits and credits means that:

Expense accounts are increased with credit entries.

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True or false for the following statement : " Debit means an increase and Credit means a decrease ."

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ACCT*2200*W04 midterm- Requires Respondus LockDown Browser

A debit may signify a(n)

View Explanation

Log in for full answers

Similar Questions

Regardless of the business activity recorded, the left side of an account is the debit side and the right side is the credit side.

The double-entry system of debits and credits means that:

Expense accounts are increased with credit entries.

What happens if a credit amount is entered in the A/R Adjustment Entry form?

You buy a Hotel and erect it on your Property, which accounts are debited and credited respectively

True or false for the following statement : " Debit means an increase and Credit means a decrease ."

True or False? " In recording for the business transactions, debits mean an increase and credit means a decrease."

Credits are always on the __________ side of a T-account.

More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

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