Accounting Fundamentals Certification (AFC) Practice Test

Question: 1 / 400

In accounting, what does the term "debit" usually signify?

An increase in liabilities

An increase in assets or expenses

In accounting, the term "debit" typically signifies an increase in assets or expenses. When a debit entry is made, it represents resources acquired by the business or an expense that the company incurs, thus increasing the overall assets or expenses on the balance sheet or income statement, respectively. This foundational principle emphasizes that debits are associated with the use of resources, reflecting a company's growth or costs related to its operations.

Understanding this concept is crucial because it aligns with the double-entry accounting system, where every transaction affects at least two accounts. When you debit an asset account, for example, you are recording a positive increase, which is fundamental to analyzing a company's financial position and performance. This background is essential for grasping how transactions impact financial statements, smoothing the path for further learning in accounting practices.

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A decrease in equity

It has no impact on accounts

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