BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -7. To increase the balance in the following accounts, would you debit the account or would you credit the account? Accounts Payable is a liability account. Liability accounts have credit balances and to increase the balance you need to CREDIT the account.

Detailed explanation-2: -As a liability account, Accounts Payable is expected to have a credit balance. Hence, a credit entry will increase the balance in Accounts Payable and a debit entry will decrease the balance.

Detailed explanation-3: -Debits increase asset or expense accounts and decrease liability, revenue or equity accounts. Credits do the reverse.

Detailed explanation-4: -These ending balances by account type can be referred to as the natural balance. Assets and expenses both increase with a debit and therefore have debit ending balances. Liabilities, equity, and revenue increase with a credit and therefore have credit ending balances.

Detailed explanation-5: -Accounts increased by debits A debit will increase the following types of accounts: Assets (Cash, Accounts receivable, Inventory, Land, Equipment, etc.) Expenses (Rent Expense, Wages Expense, Interest Expense, etc.) Losses (Loss on the sale of assets, Loss from a lawsuit, etc.)