Question

A credit to a liability accounta.indicates an increase in the amount owed to creditors.b.indicates a decrease in the amount owed to creditors.c.is an error.d.must be accompanied by a debit to an asset account.

Answer 1

Answer: A. indicates an increase in the amount owed to creditors.

Explanation: Since liabilities are basically an obligation, debt or responsibility owed to someone, a credit (increase) to a liability account indicates a corresponding increase in the amount owed to creditors (a person to whom a debt is owed). Liability can also be seen as a claim against a company's assets. This means that creditors have a claim against the company's assets. Liabilities owed to creditors are settled over time by/through the transfer of economic benefits which may include money, goods, or services.

Answer 2

Answer:

The correct answer is A. indicates an increase in the amount owed to creditors.

Explanation:

It groups all the accounts that represent the obligations contracted by the economic entity in development of the ordinary course of its activity, payable in money, goods or services.

It includes financial obligations, suppliers, accounts payable, taxes, levies and fees, labor obligations, deferred, other liabilities, estimated liabilities, provisions, bonds and business papers.

The accounts that make up this class will always have credit balances.

The liabilities expressed in foreign currency on the last day of the month or year, will be adjusted based on the exchange rate representative of the market at that date, recording such adjustment as a higher value of the liability charged to the results of the year, except when it should activate.