State BPA Fundamental Accounting Practice Exam

What is the effect of a debit on an expense account?

1. Increases the expense account

2. Decreases the expense account

3. No effect on the expense account

4. Credits the expense account

The correct answer is: Decreases the expense account

The correct choice indicates that a debit has the effect of increasing an expense account. In accounting, the double-entry bookkeeping system is used, where each transaction affects at least two accounts. An expense account reflects costs incurred by a business and is categorized as a nominal account. When an expense is recorded, it is typically recorded on the debit side. This is because, in accordance with accounting principles, debiting an expense account will increase its balance. As expenses increase, they ultimately reduce net income on the income statement, affecting the overall profitability of the business. The other options misunderstand the nature of expense accounts; one incorrectly states that a debit decreases the expense account, which contradicts basic accounting rules for expenses. The idea that there could be no effect or that a debit would credit the expense account also does not align with how debits and credits are applied in accounting. Overall, debits to an expense account always increase its balance, reflecting higher expenses incurred.