7RQ - Horngren'S Financial And Managerial Accounting

Question

When are credits increases? When are credits decreases?

Step-by-Step Solution

Answer

Liabilities are the amount owed to other businesses. Credit increase in liabilities, common stock, and revenues, and credit decreases for assets, expenses, and dividends.

Definition of Liabilities

The liabilities are defined as the amount owed by the business to some other company or party in exchange for the acquisition of some assets.

Credits increase and credits decrease

The credit increases in the case of the liabilities and equity (common stock and revenues), and the credit decreases in the case of assets, expenses, and dividends.