Which of the following statements is true of expenses? A. Expenses increase equity, so an expense account's normal balance is a debit balance. B. Expenses decrease equity, so an expense account's normal balance is a credit balance. C. Expenses increase equity, so an expense account's normal balance is a credit balance. D. Expenses decrease equity, so an expense account's normal balance is a debit balance.

Question

Skipper

Business

16 November, 07:02

Which of the following statements is true of expenses? A. Expenses increase equity, so an expense account's normal balance is a debit balance. B. Expenses decrease equity, so an expense account's normal balance is a credit balance. C. Expenses increase equity, so an expense account's normal balance is a credit balance. D. Expenses decrease equity, so an expense account's normal balance is a debit balance.

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Answers (1)

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Breean · Answer 1

D. Expenses decrease equity, so an expense account's normal balance is a debit balance.

Explanation:

As we know that

The assets and the expenses account has a normal debit balance whereas the liabilities, revenues, and the stockholder equity has a normal credit balance

Plus the expenses decreases the equity as the expenses are reflect in the retained earning statement which is also a part of the stockholder equity statement whereas the revenues increases the equity.