Practice question · Multiple choice
Crediting an asset account decreases it, while crediting a liability increases it. Why do the two behave in opposite directions?
Hints
- Write the accounting equation and ask what keeps it balanced.
- Debit and credit are directions in the equation, not good and bad.
Show the answer
D. Because they sit on opposite sides of
Why
Debit and credit are left and right of an identity. Once the equation is held in mind the rules stop needing memorisation, they are forced by keeping both sides equal.
Practise Double-Entry Bookkeeping
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More questions on Double-Entry Bookkeeping
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