State BPA Fundamental Accounting Practice Exam

Which of the following accounts is typically increased with a debit?

1. Liabilities

2. Revenues

3. Expenses

4. Equity

The correct answer is: Expenses

In accounting, the rules of double-entry bookkeeping dictate how accounts are affected by transactions, specifically which accounts are increased or decreased by debits or credits. Typically, assets and expenses are increased with debits. When discussing expenses, these accounts reflect costs incurred by a business in its efforts to generate revenue. Expenses represent the outflow of resources and thus reduce equity. Since an increase in expenses typically indicates that the business has incurred additional costs, these accounts are increased with a debit. In contrast, liabilities and equity accounts are increased with credits, while revenue accounts also increase with credits. This foundational knowledge of debit and credit rules ensures accurate financial reporting and understanding of a company’s financial position.