An Important Rule to Remember When Working with T Accounts

question 36

Multiple Choice

An important rule to remember when working with T accounts is:

• A) when you debit an account, you are entering an amount of the right-hand side of the T account.
• B) an increase to accounts payable will be recorded as a debit.
• C) to credit an account means to enter an amount on the right-hand side of the T account.
• D) the debit side of a T account is on the right-hand side of the T account for liabilities and revenues.

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Definitions:

Capitalism

An economic system in which productive resources are owned privately and goods and resources are allocated through market prices.

Exchange

The act of giving one thing and receiving another (especially of the same type or value) in return, often referring to the trading of goods, services, or currencies.

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.

Specialization

The process of concentrating on and becoming expert in a particular subject or skill within production or labor.