Expenses represent a decrease in liabilities.

Name: Expenses represent a decrease in liabilities.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Expenses are not a decrease in liabilities. Expenses are a decrease in equity or an increase in liabilities, depending on the type of expense. For example, if a company incurs an expense for salaries payable to employees, it would increase the liability for salaries payable and decrease the equity.

Expenses Represent a Decrease in Liabilities