Debits

question 129

Multiple Choice

Debits

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

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Definitions:

Expense Recognition

The accounting principle that dictates expenses should be recorded in the period in which they are incurred, not necessarily when they are paid.

Capital Lease

A lease classified as an asset on a lessee's balance sheet, indicating the lessee has substantial control over the asset.

Operating Lease

A lease agreement for equipment or property that does not transfer ownership to the lessee and is typically for a period shorter than the asset's useful life.

Total Expense

The sum of all expenses incurred by a business, including cost of goods sold, operating expenses, and non-operating expenses.