Which of the following statements is not true?
A)Expenses increase shareholders' equity.
B)Expenses have normal debit balances.
C)Expenses decrease shareholders' equity.
D)Expenses are a negative factor in the calculation of net income.

Question

Quizplus · Accepted Answer

Expenses decrease shareholders' equity because they represent the cost of operating the business. When expenses are incurred, they reduce the net income, which in turn reduces the amount of retained earnings, a component of shareholders' equity.

Which of the Following Statements Is Not True