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Regarding the Relationships of Revenues and Expenses to Assets and Liabilities,state

Question 71

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Regarding the relationships of revenues and expenses to assets and liabilities,state whether each of the following statements is true or false.

Premises:
Recording a decrease in assets may be associated with an increase in an expense account.
A decrease in Supplies will be accompanied by an increase in Supplies Expense.
Recording an increase in a revenue account may be associated with a decrease in assets.
Recording an increase in a revenue account may be associated with a decrease in liabilities.
Responses:
False
True

Correct Answer:

Recording a decrease in assets may be associated with an increase in an expense account.
A decrease in Supplies will be accompanied by an increase in Supplies Expense.
Recording an increase in a revenue account may be associated with a decrease in assets.
Recording an increase in a revenue account may be associated with a decrease in liabilities.
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