Which of the Following Statements Is True

question 120

Multiple Choice

Which of the following statements is true?

• A) Debits increase assets and increase liabilities.
• B) Credits decrease assets and decrease liabilities.
• C) Credits decrease assets and increase liabilities.
• D) Debits decrease liabilities and decrease assets.

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Definitions:

Net Income

The total earnings of a company after deducting all expenses, taxes, and costs from its total revenue.

EBIT

Earnings Before Interest and Taxes, a measure of a firm's profit that includes all incomes and expenses except interest and income tax expenses.

Interest Expense

The cost incurred by an entity for borrowed funds.

Capital Structure

The composition of a company's funding, including debt, equity, and other financial instruments, which defines how a company finances its overall operations and growth.