A Credit Entry Is Made To

question 53

Multiple Choice

A credit entry is made to:

• A) decrease an asset, increase a liability, and decrease equity.
• B) decrease an expense, increase income, and increase equity.
• C) increase an asset, decrease a liability, and decrease equity.
• D) decrease an asset, decrease a liability, and increase equity.

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Definitions:

Variable Costs

Costs that change as output levels change.

Marginal Costs

The additional cost incurred in the production of one more unit of a good or service.

Fixed Costs

Costs that do not change with the amount of goods or services produced, such as rent, salaries, or insurance.

Accounting Profit

Profits as shown on a company’s financial statements. Accounting profit does not necessarily correspond to real or economic profit.