Which of the following statements regarding the expanded accounting equation is correct?
A)Debits reduce expenses.
B)The total credits recorded in revenue accounts must equal the total debits recorded in expense accounts.
C)Across all revenue accounts,the total value of all debits must equal the total value of all credits.
D)Credits increase revenues.

Question

Quizplus · Accepted Answer

Revenues increase net income,which increases the stockholders' equity account Retained Earnings.Since stockholders' equity,which is on the right side of the accounting equation,is increased with credits,revenues are increased with credits.Expenses decrease net income,which decreases the stockholders' equity account Retained Earnings.As a result,expenses are increased with debits.For any given transaction,the debit(s)must equal the credit(s).The total credits recorded in revenue accounts would only equal the total debits recorded in expense accounts when the company's net income is zero.If the total debits recorded in revenue accounts equaled the total credits recorded in those accounts,all of the revenue accounts combined would have a zero balance (and,so,this answer choice does not make any sense).

Which of the Following Statements Regarding the Expanded Accounting Equation