An accountant has debited an asset account for $2,000 and credited an expense account for $4,000. Which of the following would be the correct way to complete the recording of the transaction?
A) Credit an asset account for $4,000.
B) Credit a liability account for $2,000.
C) Credit a shareholders' equity account for $2,000.
D) Debit a shareholders' equity account for $2,000.

Question

Quizplus · Accepted Answer

The transaction needs to balance, so the difference of $2,000 (credit more than debit) should be credited to shareholders' equity to maintain the accounting equation.

An Accountant Has Debited an Asset Account for $2,000 and Credited