Liability accounts increase with a debit and decrease with a credit.

Question

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Liability accounts increase with a credit and decrease with a debit. This is because liabilities represent obligations that the company owes to others, so when the company borrows money or incurs a debt, the liability account must be credited to reflect the increase in the obligation. When the liability is paid off or reduced, the account is debited to reflect the decrease.

Liability Accounts Increase with a Debit and Decrease with a Credit