Multiple choice

Find the correct statement

  1. credit the increase in capital

  2. debit the decrease in assets

  3. credit the decrease in liabilities

  4. debit the increase in revenue

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Option A is correct: increases in capital are always credited, as capital is a liability of the business to its owner. Option B is wrong; decreases in assets are credited (assets have normal debit balances). Option C is wrong; decreases in liabilities are debited (liabilities have normal credit balances). Option D is wrong; increases in revenue are credited (revenue increases capital).

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