Question

Which of the following statements is false?

a. Unearned Revenue is a liability account.
b. A credit increases the Rent Expense account.
c. A debit increases the Accounts Receivable account.
d. A debit decreases the Unearned Revenue account.
e. A credit decreases the Prepaid Rent account.

Answer 1

The false statement is 'b. A credit increases the Rent Expense account,' as expenses are increased by debits, not credits.

Step-by-step explanation:

The false statement among the options given relating to accounting principles is: b. A credit increases the Rent Expense account. Typically in accounting, expenses are increased with a debit and decreased with a credit. Let's review the other statements:

• a. Unearned Revenue is a liability account. This is true because unearned revenue represents money received for services or goods that have not yet been delivered or performed.
• c. A debit increases the Accounts Receivable account. This is true as when a company is owed money for goods or services provided on credit, the Accounts Receivable balance increases with a debit.
• d. A debit decreases the Unearned Revenue account. This is also true as when the company earns the revenue by providing goods or services, it will debit the unearned revenue account to decrease the liability and credit the revenue account to recognize the income.
• e. A credit decreases the Prepaid Rent account. This is true because prepaid rent is an asset account and assets are decreased with a credit.