Which of the Following Applications of the Rules of Debit

question 64

Multiple Choice

Which of the following applications of the rules of debit and credit is true?

• A) decrease Prepaid Insurance with a credit and the normal balance is a credit
• B) increase Accounts Payable with a credit and the normal balance is a debit
• C) increase Supplies Expense with a debit and the normal balance is a debit
• D) decrease Cash with a debit and the normal balance is a credit

---

Definitions:

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Income Before Taxes

Income before taxes is a measure of a company's profitability before any tax expense has been deducted from revenues.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time.

Return on Sales

A financial ratio that calculates how efficiently a company is at generating operating profit from its revenue.