FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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### Quiz Question: Liability Accounts **Question:** A liability account is increased by a debit. - [ ] True - [ ] False **Explanation:** In accounting, the rules of debit and credit are fundamental for understanding how transactions are recorded. For liability accounts, which represent obligations or debts the company needs to pay, the correct rule is that they are increased by a credit and decreased by a debit. Thus, the correct answer to the question is "False". Understanding the different types of accounts and their behaviors with debits and credits: - **Asset accounts** increase with a debit and decrease with a credit. - **Liability accounts** increase with a credit and decrease with a debit. - **Equity accounts** (Owner’s Equity) increase with a credit and decrease with a debit. - **Revenue accounts** increase with a credit and decrease with a debit. - **Expense accounts** increase with a debit and decrease with a credit. It is important to accurately apply these rules to maintain the integrity of financial records and ensure accurate financial statements.
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Transcribed Image Text:### Quiz Question: Liability Accounts **Question:** A liability account is increased by a debit. - [ ] True - [ ] False **Explanation:** In accounting, the rules of debit and credit are fundamental for understanding how transactions are recorded. For liability accounts, which represent obligations or debts the company needs to pay, the correct rule is that they are increased by a credit and decreased by a debit. Thus, the correct answer to the question is "False". Understanding the different types of accounts and their behaviors with debits and credits: - **Asset accounts** increase with a debit and decrease with a credit. - **Liability accounts** increase with a credit and decrease with a debit. - **Equity accounts** (Owner’s Equity) increase with a credit and decrease with a debit. - **Revenue accounts** increase with a credit and decrease with a debit. - **Expense accounts** increase with a debit and decrease with a credit. It is important to accurately apply these rules to maintain the integrity of financial records and ensure accurate financial statements.
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