Question

Which of the following statements about debits is false?

1) Debits increase expenses.
2) Debits increase assets.
3) Debits increase liabilities.
4) Debits decrease liabilities.

Answer 1

The false statement is that debits increase liabilities. Debits actually decrease liabilities and are used to increase asset and expense accounts according to standard accounting practices.

Step-by-step explanation:

When determining which of the following statements about debits is false, it is essential to understand the rules of double-entry bookkeeping. In this accounting system, debits and credits are used to record every financial transaction. A T-account is a visual representation that separates a firm's assets from its liabilities. The left side of a T-account lists assets, while the right side lists liabilities and equity.

Now, let's consider the provided statements about debits:

1. Debits increase expenses.
2. Debits increase assets.
3. Debits increase liabilities.
4. Debits decrease liabilities.

The false statement among those listed is: 3) Debits increase liabilities. In standard accounting practices, debits do the following:

• Increase asset and expense accounts.
• Decrease liability, equity, and revenue accounts.

Thus, the correct action of debits on liabilities is actually to decrease them, not increase them.