For Fees Earned, what is the type of account and the increase side?

For Fees Earned, what is the type of account and the increase side?

• A. Asset, Dr.
• B. Expense, Dr.
• C. Revenue, Cr.
• D. Liability, Cr.

Answer: (C)

Fees Earned is a revenue account. Revenue increases owners’ equity, so it is increased on the credit side. It’s not an asset or an expense (both of those are increased with a debit) and it’s not a liability (which is increased with a credit, but Fees Earned represents income, not a payable). In practice, when services are performed, you credit Fees Earned (and debit cash or accounts receivable). This shows why the increase side is a credit and why the type is revenue.

Fees Earned is a revenue account. Revenue increases owners’ equity, so it is increased on the credit side. It’s not an asset or an expense (both of those are increased with a debit) and it’s not a liability (which is increased with a credit, but Fees Earned represents income, not a payable). In practice, when services are performed, you credit Fees Earned (and debit cash or accounts receivable). This shows why the increase side is a credit and why the type is revenue.