Which of the following accounts is increased with a debit? a. Dividends. b. Legal fees earned. c. Rent payable. d. Share capital. e. Revenue received in advance.<\/p>\n\n\n\n
The correct answer and explanation is:<\/strong><\/mark><\/p>\n\n\n\n The correct answer is:<\/p>\n\n\n\n a. Dividends<\/strong><\/p>\n\n\n\n In accounting, whether an account is increased by a debit or a credit depends on the type of account it is. Here\u2019s a breakdown of the types of accounts involved in your question:<\/p>\n\n\n\n Dividends are unique in that they reduce equity but have a debit balance when declared. So when dividends increase, the dividends account is debited.<\/p>\n\n\n\n Dividends are a distribution of profits to shareholders, which decreases retained earnings (equity). The dividends account is a temporary account used to track this distribution during a period. Because equity normally has a credit balance, and dividends reduce equity, dividends have a debit balance. When dividends are declared, the dividends account is debited, increasing its balance, and retained earnings (or cash) is credited.<\/p>\n\n\n\n In conclusion:<\/strong> Among the options given, Dividends<\/strong> is the only account that increases with a debit. All others are either revenue, liability, or equity accounts that increase with a credit.<\/p>\n","protected":false},"excerpt":{"rendered":" Which of the following accounts is increased with a debit? a. Dividends. b. Legal fees earned. c. Rent payable. d. Share capital. e. Revenue received in advance. The correct answer and explanation is: The correct answer is: a. Dividends Explanation: In accounting, whether an account is increased by a debit or a credit depends on […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-24891","post","type-post","status-publish","format-standard","hentry","category-quiz-questions"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/24891","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=24891"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/24891\/revisions"}],"predecessor-version":[{"id":24896,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/24891\/revisions\/24896"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=24891"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=24891"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=24891"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n\n\n\nExplanation:<\/h3>\n\n\n\n
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Dividends represent the distribution of profits to shareholders. Dividends are not<\/strong> expenses; instead, they are distributions that reduce retained earnings (part of equity). Dividends have a debit balance<\/strong> when declared, so dividends increase with a debit<\/strong>. When dividends are paid, the dividends account is debited, and cash (an asset) is credited.<\/li>\n\n\n\n
This is a revenue account. Revenue accounts increase with a credit<\/strong>, not a debit. So legal fees earned increase on the credit side.<\/li>\n\n\n\n
This is a liability account representing rent that is owed but not yet paid. Liability accounts increase with a credit<\/strong> and decrease with a debit. Therefore, rent payable increases with a credit.<\/li>\n\n\n\n
Share capital is an equity account representing the investment by shareholders in the company. Equity accounts generally increase with a credit<\/strong>. So share capital increases with a credit.<\/li>\n\n\n\n
Also known as unearned revenue, this is a liability account representing cash received before services are provided or goods delivered. Like other liabilities, it increases with a credit<\/strong>.<\/li>\n<\/ol>\n\n\n\n
\n\n\n\nSummary of Account Types and Debit\/Credit Rules:<\/h3>\n\n\n\n
Account Type<\/th> Normal Balance<\/th> Increase Side<\/th><\/tr><\/thead> Assets<\/td> Debit<\/td> Debit<\/td><\/tr> Liabilities<\/td> Credit<\/td> Credit<\/td><\/tr> Equity<\/td> Credit<\/td> Credit<\/td><\/tr> Revenues<\/td> Credit<\/td> Credit<\/td><\/tr> Expenses<\/td> Debit<\/td> Debit<\/td><\/tr> Dividends<\/td> Debit<\/td> Debit<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
\n\n\n\nWhy Dividends Increase With a Debit:<\/h3>\n\n\n\n
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