BANKING AFFAIRS

Detailed explanation-1: -Answer: C. Interest earned is the correct answer.

Detailed explanation-2: -As Interest received is an income therefore, it will have credit balance.

Detailed explanation-3: -Accounts decreased by debits A debit will decrease the following types of accounts: Liabilities (Notes Payable, Accounts Payable, Interest Payable, etc.) Stockholders’ Equity (Common Stock, Retained Earnings)

Detailed explanation-4: -Debits and Credits Explained For example, if a business purchases a new computer for $1, 200 on credit, it would record $1, 200 as a debit in its account for equipment (an asset) and $1, 200 as a credit in its accounts payable account (a liability).

Detailed explanation-5: -Liability accounts are categories within the business’s books that show how much it owes. A debit to a liability account means the business doesn’t owe so much (i.e. reduces the liability), and a credit to a liability account means the business owes more (i.e. increases the liability).