Debits increase which types of accounts?

• A. Liabilities and Equity
• B. Revenue and Expenses
• C. Assets and Expenses
• D. Assets and Liabilities

Answer: (C)

Debits increase asset and expense accounts because those accounts carry a normal debit balance. In double-entry accounting, every transaction has at least one debit and one credit. Asset accounts (like cash, accounts receivable, equipment) rise with a debit, so a debit entry increases their balance. Expense accounts (such as rent, utilities) also rise with a debit, since expenses are recorded on the debit side to reflect increases in costs. By contrast, liabilities and equity have normal credit balances, so debits decrease them, and revenue also increases on the credit side. So the only types that are increased by debits are assets and expenses. For example, incurring an expense would be a debit to the expense account and a credit to another account, while paying cash would be a credit to cash (an asset) and a debit to a corresponding asset or expense, depending on the transaction.