To decrease an asset you would?

To decrease an asset you would?

• A. Credit
• B. Debit
• C. Expense
• D. Liability

Answer: (A)

In double-entry accounting, asset accounts have a normal debit balance. That means increases to assets are recorded with a debit, and decreases are recorded with a credit. So, to decrease an asset, you credit the asset account. For example, paying cash reduces the cash asset, so you would credit the cash account (and debit the corresponding expense or asset you acquire). This is why credit is the correct action to decrease an asset. Debit would increase assets, so it doesn’t accomplish a decrease. An expense is not the entry used to reduce an asset by itself (it affects income and equity, and, if cash is involved, you’d still credit the asset). A liability is a separate account type and isn’t used to directly decrease an asset.

In double-entry accounting, asset accounts have a normal debit balance. That means increases to assets are recorded with a debit, and decreases are recorded with a credit. So, to decrease an asset, you credit the asset account.

For example, paying cash reduces the cash asset, so you would credit the cash account (and debit the corresponding expense or asset you acquire). This is why credit is the correct action to decrease an asset.

Debit would increase assets, so it doesn’t accomplish a decrease. An expense is not the entry used to reduce an asset by itself (it affects income and equity, and, if cash is involved, you’d still credit the asset). A liability is a separate account type and isn’t used to directly decrease an asset.