Your Roommate, a Marketing Major, Thinks That Debit Means Decrease

question 184

Essay

Your roommate, a marketing major, thinks that debit means decrease and credit means increase. And, that every account can be debited and credited and as result, every account can have both a debit and a credit balance. Explain to your roommate (1) the meaning of debit and credit; (2) which accounts can only be debited, which can only be credited, and which can be both debited and credited; and (3) which accounts normally have debit balances and which credit balances.

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price in a particular period.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, expressed as a percentage.

Electricity Consumption

The amount of electrical energy used by households, businesses, and industries over a certain period, typically measured in kilowatt-hours (kWh).

Price Elasticity

A gauge of the extent to which the demand for a certain item is affected by fluctuations in its cost.