Liabilities increase with which type of account entry?

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Multiple Choice

Liabilities increase with which type of account entry?

Liabilities have a normal credit balance, so increases are recorded on the credit side. When a liability grows—such as taking out a loan or incurring an Accounts Payable—you credit the liability account. Debits, by contrast, reduce liabilities and are used to increase assets or expense-related accounts. So, to increase liabilities, you use a credit entry, which is why that option is the correct one.

Liabilities have a normal credit balance, so increases are recorded on the credit side. When a liability grows—such as taking out a loan or incurring an Accounts Payable—you credit the liability account. Debits, by contrast, reduce liabilities and are used to increase assets or expense-related accounts. So, to increase liabilities, you use a credit entry, which is why that option is the correct one.

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