Which of the Following Statements About Expenses Is CORRECT

question 103

Multiple Choice

Which of the following statements about expenses is CORRECT?

• A) Expenses increase owner's equity, so an expense account's normal balance is a credit balance.
• B) Expenses decrease owner's equity, so an expense account's normal balance is a credit balance.
• C) Expenses increase owner's equity, so an expense account's normal balance is a debit balance.
• D) Expenses decrease owner's equity, so an expense account's normal balance is a debit balance.

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Definitions:

U.S. Net Exports

The difference between the value of goods and services the United States exports to other countries and the value of goods and services it imports from other countries.

Aggregate Demand And Supply Model

An economic model that explains price levels and the production of goods and services through the relationship between aggregate demand and supply.

Short-Run Phillips Curve

Describes the inverse relationship between the rate of inflation and the unemployment rate over a short period.

Rational Expectations

The theory that people optimally use all the information they have, including information about government policies, when forecasting the future.