Which of the following statements is TRUE of expenses?
A) Expenses increase equity, so an expense account's normal balance is a credit balance.
B) Expenses decrease equity, so an expense account's normal balance is a credit balance.
C) Expenses increase equity, so an expense account's normal balance is a debit balance.
D) Expenses decrease equity, so an expense account's normal balance is a debit balance.

Question

Quizplus · Accepted Answer

Expenses decrease equity, so an expense account's normal balance is a debit balance. This is because expenses are costs incurred by a company to generate revenue or maintain operations, and as they are subtracted from revenues, they result in a decrease in equity. Therefore, their balance is typically maintained as a debit balance in the accounting system.

Which of the Following Statements Is TRUE of Expenses