Which of the Following Statements Is True Regarding Debits and Credits

question 54

Multiple Choice

Which of the following statements is true regarding debits and credits?

• A) On the income statement, debits are used to increase account balances, whereas on the statement of financial position, credits are used to increase account balances.
• B) The basic equation on the statement of financial position is Assets + Liabilities = Equity.
• C) The rules for debit and credit and the normal balance of Share Capital-Ordinary are the same as for liabilities.
• D) On the income statement, revenues are increased by debits whereas on the statement of financial position retained earnings is increased by a credit.

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Definitions:

Real Estate Investment Trusts

Companies that own, operate, or finance income-producing real estate, providing investors with an opportunity to invest in large-scale, diversified portfolios of real estate.

Repurchase Agreements

Short-term loans involving the sale of securities with an agreement to repurchase them at a set price on a future date.

Federal Funds Rate

The interest rate at which banks lend reserve balances to other depository institutions overnight, influenced by the Federal Reserve.

Reserve Requirements

Regulations set by central banks determining the minimum amount of reserves a bank must hold against deposits, a tool for monetary policy.