Which action increases the balance of a liability account?

Which action increases the balance of a liability account?

• A. Debit the account
• B. Increase the account
• C. Credit the account
• D. Decrease the account

Answer: (C)

In accounting, liability accounts have a normal credit balance. To increase what you owe, you record a credit to the liability account. Debits decrease liabilities, and credits increase them. So when you incur a new obligation, you credit the liability account (for example, taking out a loan increases Liabilities—Notes Payable with a credit). The other options either reduce the liability or are not the entry that raises the balance.

In accounting, liability accounts have a normal credit balance. To increase what you owe, you record a credit to the liability account. Debits decrease liabilities, and credits increase them. So when you incur a new obligation, you credit the liability account (for example, taking out a loan increases Liabilities—Notes Payable with a credit). The other options either reduce the liability or are not the entry that raises the balance.