Which of the following accounts is decreased by a debit entry?
a. Accounts Payable
b. Cash
c. Prepaid Insurance
d. Insurance Expense
a is right :)))
To determine which account is decreased by a debit entry, we need to understand the basic rule of accounting. In double-entry bookkeeping, every transaction has two sides: a debit side and a credit side. Debit entries increase certain accounts, while they decrease others. On the other hand, credit entries increase some accounts while decreasing others.
In this context, we can identify the account that is decreased by a debit entry by looking at the options provided:
a. Accounts Payable: Accounts Payable represents the amount that a company owes to its creditors for goods or services purchased on credit. A debit entry to Accounts Payable would increase the amount owed, not decrease it.
b. Cash: Cash represents the amount of money a company has on hand. A debit entry to the Cash account would increase the amount of cash, not decrease it.
c. Prepaid Insurance: Prepaid Insurance represents the amount paid in advance for insurance coverage. A debit entry to Prepaid Insurance would decrease the amount paid in advance, not increase it.
d. Insurance Expense: Insurance Expense represents the cost of insurance that a company incurs during a specific period. A debit entry to the Insurance Expense account would increase the expense, not decrease it.
Based on this analysis, none of the accounts listed is decreased by a debit entry.
The account that is decreased by a debit entry is:
d. Insurance Expense