A transaction that includes a debit to an expense and a credit to a liability indicates that:
A) revenues increased.
B) expenses increased.
C) liabilities decreased.
D) cash decreased.

Question

Quizplus · Accepted Answer

When an expense account is debited and a liability account is credited, it indicates an increase in expenses and an increase in the company's obligation to pay for those expenses. The debit to expense reduces the company's net income and the credit to liability increases the amount owed to creditors. This type of transaction does not impact revenues, cash, or liabilities decreasing.

A Transaction That Includes a Debit to an Expense and a Credit