What Type of Account Is Increased with a Debit but Represents

question 40

Multiple Choice

What type of account is increased with a debit but represents a decrease in retained earnings?

• A)Liability
• B)Asset
• C)Revenue
• D)Dividends

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Definitions:

Legal Insolvency

A financial condition in which an entity is unable to meet its debt obligations as they come due, potentially leading to legal processes for debt resolution.

Obligations

Duties or responsibilities imposed by legal or ethical requirements, contracts, or agreements.

LBO

Leveraged buyout. A process in which an investor group buys up a company’s stock using a small amount of equity and borrowing the rest of the money required. The debt is often secured by the firm’s assets. The investor groups are often the firms’ managements, and the company goes from being publicly held to being privately held.

Takeover

The acquisition of one company by another where the acquiring party secures control of the target company.