Which of the Following Statements Is TRUE of Expenses

question 90

Multiple Choice

Which of the following statements is TRUE of expenses?

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

---

Definitions:

Pure Monopolist

A market structure where a single firm is the sole producer for a product or service, with no close substitutes, giving it significant market power.

Perfectly Elastic

describes a market situation in which the quantity demanded or supplied changes infinitely in response to any change in price.

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, indicating overall profitability beyond breakeven.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for significant competition but also some degree of market power for individual firms.