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A credit to a liability account a) indicates a decrease in the amount owed to creditors. b) is an error. c) must be accompanied by a debit to an asset account. d) indicates an increase in the amount owed to creditors

A credit to a liability account a) indicates a decrease in the amount owed to creditors. b) is an error. c) must be accompanied by a debit to an asset account. d) indicates an increase in the amount owed to creditors

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A credit to a liability account a) indicates a decrease in the amount owed to creditors. b) is an error. c) must be accompanied by a debit to an asset account. d) indicates an increase in the amount owed to creditors.
Expert Solution
Step 1

Amount owed  by the company to the outside persons such as suppliers, bank etc are called liabilities.

All liabilities normally have credit balance.

 

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