Question

Which accounts require a credit to increase the account? (Select all that apply.)

a)equipment
b)inventory
c)revenue
d)common stock

Answer 1

Revenue and Common Stock accounts require a credit to increase their balance in the double-entry accounting system. Equipment and Inventory are asset accounts and increase with a debit instead.

Step-by-step explanation:

Accounts that Require a Credit to Increase

Within the double-entry accounting system, specific accounts require a credit entry to reflect an increase in their balance. The types of accounts that typically increase with a credit are revenue and equity accounts.

• Revenue - When the company earns income through sales, service fees, etc., a credit to the revenue account is made, increasing the total revenue.
• Common Stock - Representing the equity of shareholders, common stock increases with a credit when more shares are issued or paid-in capital increases.

On the other hand, asset accounts like equipment and inventory increase with a debit rather than a credit. A debit entry to these accounts indicates an addition to the company's assets. Hence, the correct options that require a credit to increase the account are revenue and common stock.