Question

question 25 of 25
policies
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which of the following statements is true?
debits decrease liabilities and decrease assets.
credits decrease assets and decrease liabilities.
credits decrease assets and increase liabilities.
debits increase assets and increase liabilities.

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Explanation:

To determine the true statement, we recall the basic accounting rules:

• For assets: Debits increase assets, credits decrease assets.
• For liabilities: Debits decrease liabilities, credits increase liabilities.

Now let's analyze each option:

1. "Debits decrease liabilities and decrease assets." → Debits increase assets, so this is false.
2. "Credits decrease assets and decrease liabilities." → Credits increase liabilities, so this is false.
3. "Credits decrease assets and increase liabilities." → This matches the rules (credits decrease assets, credits increase liabilities), so this is true.
4. "Debits increase assets and increase liabilities." → Debits decrease liabilities, so this is false.

Answer:

C. Credits decrease assets and increase liabilities.