What will usually cause a Liability to increase?a.No changeb.No entryc.Creditd.debit
Question
What will usually cause a Liability to increase?a.No changeb.No entryc.Creditd.debit
Solution
A liability usually increases when it is credited. So, the correct answer is c. Credit.
Here's a step-by-step explanation:
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In accounting, we use a system called double-entry bookkeeping, which means every entry to an account requires a corresponding and opposite entry to a different account.
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The accounts are divided into five types: assets, liabilities, equity, revenue, and expenses.
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Liabilities are what a company owes, like loans, accounts payable, mortgages, deferred revenues, and accrued expenses.
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In the double-entry bookkeeping system, liabilities are increased by credits and decreased by debits.
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Therefore, when a liability account is credited, it increases. Conversely, when a liability account is debited, it decreases.
So, a credit entry will usually cause a liability to increase.
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