Which of the Following Accounts Decreases with a Debit

question 14

Multiple Choice

Which of the following accounts decreases with a debit?

• A) Notes payable
• B) Prepaid insurance
• C) Cash
• D) Land

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Definitions:

Acid-Test Ratio

A financial metric that measures a company's ability to cover its current liabilities with its most liquid assets.

Liquidity Problems

Financial challenges arising from a company's inability to convert assets to cash quickly without significant loss in value, possibly hindering its capacity to meet its short-term obligations.

Purchase Discounts

Reductions in the price of goods purchased, often provided by suppliers as an incentive for early payment.

Trade Discounts

A reduction in the listed price of goods or services offered by sellers to buyers, often based on volume purchased or to maintain long-term business relationships.