The basic accounting equation may be expanded to include the income statement effects of operating activities.Which of the statements below is correct regarding the expanded accounting equation?
A)Expenses are increased by credits and revenues are increased by debits.
B)Net Income increases the Common Stock account.
C)Expenses are increased by debits and revenues are increased by credits.
D)Retained Earnings is reduced by net income.

Question

Quizplus · Accepted Answer

Expenses are recorded just like all decreases in Stockholders' Equity,with debits.Revenues are recorded just like all increases in Stockholders' Equity,with credits.

The Basic Accounting Equation May Be Expanded to Include the Income