Which of the Following Statements Is Correct

question 41

Multiple Choice

Which of the following statements is correct?

• A)Expense accounts result in decreases in net income and stockholders' equity and therefore have credit balances.
• B)Revenue accounts result in increases in net income and stockholders' equity and therefore have debit balances.
• C)Loss accounts result in decreases in net income and stockholders' equity and therefore have debit balances.
• D)Gain accounts result in increases in net income and stockholders' equity and therefore have debit balances.

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Definitions:

Banking System

The network of banking institutions and regulations that provide financial services to individuals, businesses, and the government.

Excess Reserves

The amount of reserves a bank holds beyond the required minimum, which can be lent out to stimulate economic activity or held to meet future needs.

Create Money

The process by which central banks or monetary authorities increase the money supply.

Deposit Account

A deposit account is a bank account that allows the holder to deposit and withdraw money, often earning interest, including savings accounts, checking accounts, and other transaction accounts.