Question

which of the following groups of accounts increases with credits?
a. accounts payable, accounts receivable, fees earned
b. prepaid insurance, unearned rent, fees earned
c. accounts receivable, prepaid insurance, unearned rent
d. accounts payable, unearned rent, fees earned

Explanation:

To solve this, we recall the rules of debit and credit:

• Liabilities (e.g., Accounts Payable, Unearned Rent) and revenues (e.g., Fees Earned) increase with credits.
• Assets (e.g., Accounts Receivable, Prepaid Insurance) increase with debits.

Let's analyze each option:

• Option a: Accounts Receivable (asset, increases with debit) is included, so incorrect.
• Option b: Prepaid Insurance (asset, increases with debit) is included, so incorrect.
• Option c: Accounts Receivable and Prepaid Insurance (both assets, increase with debit) are included, so incorrect.
• Option d: Accounts Payable (liability, credit increase), Unearned Rent (liability, credit increase), Fees Earned (revenue, credit increase) – all increase with credits.

Answer:

d. Accounts Payable, Unearned Rent, Fees Earned