Certified Fraud Examiner 2025 – 400 Free Practice Questions to Pass the Exam

In the context of accounting, asset and expense accounts are fundamental components of the double-entry accounting system. These accounts follow specific rules regarding debits and credits.

Assets are resources owned by a business, and their balances increase with debits and decrease with credits. Similarly, expense accounts reflect costs incurred by a business and are also increased by debits while being decreased by credits. Therefore, stating that asset and expense accounts are decreased by credits is accurate and aligns with established accounting principles. When credits are applied to these accounts, it directly reduces their balances, unequivocally establishing the truth of the chosen statement.

Understanding the implications of asset and expense accounts is essential for comprehending financial statements. A decrease in assets typically impacts the financial health of a business, while expense accounts provide insight into the operational costs of a company. This clarification emphasizes the importance of accurate recording through credits and debits in maintaining financial integrity.