Question
A debit to an asset account indicates
a) increase in the asset
b) decrease in the asset
c) A credit was made to a liability account.
d) error
Answer:
A debit to an asset account indicates an increase in the value or amount of the asset. In accounting, assets are resources owned by a company or individual that have a monetary value and can be used to generate revenue. Examples of assets include cash, accounts receivable, inventory, property, and equipment.
Example:
When a debit is made to an asset account, it means that there has been an increase in the value of the asset or that an additional asset has been acquired. For example, if a company purchases a new computer for $1,000, it would debit its “Computer Equipment” asset account for $1,000 to reflect the increase in its assets.
It is important to note that in double-entry accounting, every transaction affects at least two accounts, with one account being debited and another being credited. Debits and credits are used to ensure that the accounting equation (assets = liabilities + equity) is always balanced.
So the correct answer to this question is option (a).
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