Which account type is increased by credits and decreased by debits?

Which account type is increased by credits and decreased by debits?

• A. ASSETS
• B. EXPENSES
• C. LIABILITIES
• D. REVENUE

Answer: (C)

With double-entry accounting, each account type has a normal balance, and credits or debits move that balance in specific directions. Liabilities have a normal credit balance, so applying a credit increases the liability and applying a debit decreases it. Think of it as taking on more obligation when you credit the liability, and reducing that obligation when you debit it. For example, when a company borrows money, the liability is credited; when it pays down the loan, the liability is debited. This pattern—credit increases, debit decreases—is what makes this account type the one that fits the description.

With double-entry accounting, each account type has a normal balance, and credits or debits move that balance in specific directions. Liabilities have a normal credit balance, so applying a credit increases the liability and applying a debit decreases it. Think of it as taking on more obligation when you credit the liability, and reducing that obligation when you debit it. For example, when a company borrows money, the liability is credited; when it pays down the loan, the liability is debited. This pattern—credit increases, debit decreases—is what makes this account type the one that fits the description.