Which of the following would be increased by recording a debit?

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Prepare for the Fundamentals of Accountancy, Business, and Management (FABM) 1 Exam. Study efficiently with multiple choice questions and detailed explanations. Enhance your knowledge and succeed in your exam with confidence.

Multiple Choice

Which of the following would be increased by recording a debit?

Explanation:
Debits increase assets and expenses, while credits increase liabilities, owner’s equity, and revenues. Since assets carry a normal debit balance, a debit entry raises their balance. In contrast, revenue accounts, as well as liability and owner’s equity accounts, have credit balances, so a debit would reduce them rather than increase. That’s why recording a debit increases assets. For example, buying equipment with cash debits the Equipment asset (increasing it) and credits Cash (decreasing it).

Debits increase assets and expenses, while credits increase liabilities, owner’s equity, and revenues. Since assets carry a normal debit balance, a debit entry raises their balance. In contrast, revenue accounts, as well as liability and owner’s equity accounts, have credit balances, so a debit would reduce them rather than increase. That’s why recording a debit increases assets. For example, buying equipment with cash debits the Equipment asset (increasing it) and credits Cash (decreasing it).

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