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

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Definitions:

Periodic System

An inventory system where the inventory count is physically updated at specific intervals, and costs of goods sold are calculated at the end of the accounting period.

Moving Average System

A method used in accounting and finance to smooth out data by generating a series of averages of different subsets of the full data set.

Freight-In Costs

Expenses associated with transporting goods from the supplier to the purchaser, typically included in the cost of inventory.

Freight-Out Costs

Expenses related to the transportation of goods from the seller to the buyer, typically recorded as a selling expense.