Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 45 - No. 40)
What is the effect of recording a credit entry to an account?
Always increases the account balance.
Always decreases the account balance.
Increases accounts with a credit balance and decreases accounts with a debit balance.
Decreases accounts with a credit balance and increases accounts with a debit balance.
Explanation
Credits increase the balance of accounts that normally have a credit balance (liabilities, owner's equity, revenue) and decrease the balance of accounts that normally have a debit balance (assets, expenses).
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