Which of the following statements regarding revenues and expenses is true?
A)Both revenues and expenses typically have credit balances.
B)Revenues and expenses are considered assets and liabilities,respectively.
C)Revenue is the same as cash.
D)Expenses decrease the amount of stockholders' equity.

Question

Quizplus · Accepted Answer

Expenses are a reduction in income, which ultimately reduces the amount of stockholders' equity. Revenues, on the other hand, increase income and therefore increase the amount of stockholders' equity. Option A is incorrect because revenues have debit balances while expenses have credit balances. Option B is incorrect because revenues and expenses are not assets or liabilities, but rather they are components of a company's income statement. Option C is incorrect because while revenue may be received in the form of cash, it can also come in other forms such as credit or debit.

Which of the Following Statements Regarding Revenues and Expenses Is