Final answer:
The correct answer in double-entry bookkeeping is B) Debit entries decrease income and increase assets. In a bank's balance sheet, deposits are listed as liabilities, and loans are assets. For an individual, deposits are assets and loans are liabilities.
Step-by-step explanation:
In double-entry bookkeeping, the correct statement is: B) Debit entries decrease income and increase assets. This principle reflects the dual aspect of every transaction in accounting, where each entry has a corresponding and opposite entry to another account. Debits typically increase asset and expense accounts, while credits typically increase liability, equity, and revenue accounts.For your T-account understanding, when a bank characterizes its assets and liabilities, a deposit is considered a liability because it is money the bank owes back to the depositor. However, loans made out by the bank to customers are considered assets, as these are funds the bank expects to receive back over time.
In contrast, on your personal balance sheet, a deposit would be an asset, and any personal loans you owe would be considered a liability.Double-entry bookkeeping requires every transaction to be recorded twice, with one entry as a debit and the other as a credit. Debit entries increase assets and decrease expenses, while credit entries decrease assets and increase liabilities. Therefore, the correct statement is D) Debit entries decrease expenses and increase assets.