Question

What are the gross decreases in economic benefits for the business?

• A. Expenses
• B. Obligations
• C. Creditors
• D. Income or gain

Answer 1

The correct option is A Expenses

Expenses are debited to profit & loss account which in turn reduces the profits of the business. All profit are belongs to the owner which are added to the capital. Hence, if expenses are debited, this will reduce the profit which in turn reduces the capital.