A debit increases the balance in all of the following accounts except for which one?
A. Cash
B. Withdrawals
C. Expenses
D. Accounts payable
My answer is D
Your answer is correct. A debit increases the balance in all accounts except for accounts payable.
To understand why, let's first discuss the concept of debits and credits in accounting. Debits and credits are used to record transactions in the accounting system.
In the accounting equation, assets are on the left side (debit side) of the equation, and liabilities and equity are on the right side (credit side) of the equation.
When you make a debit entry, it increases the balance of an account on the left side of the equation, such as assets. On the other hand, when you make a credit entry, it increases the balance of an account on the right side of the equation, such as liabilities or equity.
Now, let's go through each option:
A. Cash: When you make a debit entry to the cash account, it increases the balance because cash is an asset. So, this account is not the exception.
B. Withdrawals: When you make a debit entry to the withdrawals account, it increases the balance. Withdrawals are considered a reduction of owner's equity and are recorded on the debit side of the equation. Therefore, this account is not the exception.
C. Expenses: When you make a debit entry to an expense account, it increases the balance. Expenses also reduce owner's equity and are usually recorded as debits. So, this account is not the exception.
D. Accounts payable: When you make a debit entry to accounts payable, it decreases the balance. Accounts payable is a liability account and is recorded on the right side of the equation, which is the credit side. Therefore, this account is the exception.