Accounts are records of increases and decreases in individual financial statement items.

• A. True
• B. False
• C. Sometimes true
• D. Not always true

Answer: (A)

Accounts are the records that show how a single item on the financial statements changes over time. They track increases and decreases so you can see the current balance of that item. For example, the Cash account records receipts (increases) and payments (decreases), letting you know how much cash you have at any date. In double-entry bookkeeping, every transaction affects at least two accounts, with increases in one account paired by decreases in another. The way you record increases or decreases depends on the type of account: assets and expenses typically rise with debits, while liabilities, equity, and revenues rise with credits. Because each item has its own account that captures its movements, the idea that accounts record increases and decreases in individual financial statement items is accurate.