Question

Which account increases equity?

Expenses
Withdrawals
Treasury Stock
Revenues

Answer 1

Revenues accounts increase equity.

• Owner's equity rises as a result of revenues. Revenues must be recorded as a credit because the owner's equity typically has a credit balance.
• Revenues must be recorded as a credit because the owner's equity typically has a credit balance.
• The credit balances in the revenue accounts will be closed and moved to the owner's capital account after the accounting year, raising the owner's equity.

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Answer 2

Answer: Revenues.

Explanation: Revenues is the correct answer of this question.

Revenues must be recorded as a credit since the standard balance for owner's equity is a credit balance. The credit balances in the revenue accounts will be closed and transferred to the owner's capital account at the conclusion of the fiscal year, increasing the owner's equity.

Changes in equity reflect revenue and cost. In reality, the majority of changes in equity occur as a result of generating income and spending costs. Changes in equity occur less often when the owner adds to or withdraws money from the firm.

Revenue is reported on the income statement rather than the balance sheet alongside other assets for accounting purposes. Revenue is used to invest in other assets, pay down debt, and provide dividends to shareholders.

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