A Credit to a Liability Account

question 27

Multiple Choice

A credit to a liability account

• A) indicates an increase in the amount owed to creditors.
• B) indicates a decrease in the amount owed to creditors.
• C) is an error.
• D) must be accompanied by a debit to an asset account.

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Definitions:

Average Daily Assets

A measure used in finance to calculate the average value of assets held by a fund or company over a specific period.

Mutual Fund

An investment vehicle made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments, and other assets.

Lock-up

A period post-initial public offering (IPO) during which shareholders are restricted from selling their shares.

Hedge Funds

Investment funds that employ diverse, and often more complex, strategies than traditional mutual funds, including the use of leverage, derivatives, and short selling to generate returns.