What term refers to an expense recorded on an expense account?

In accounting, the term that refers to an expense recorded on an expense account is "debits." When you record an expense, you increase the expense account by debiting it. This action reflects the outflow of resources or costs incurred by the business, which reduces the overall equity of the company.

Debits are essential in the double-entry accounting system, where every transaction involves equal and opposite effects in at least two accounts. In this context, debiting the expense account does not increase an asset; rather, it represents a critical step in recognizing expenditures. This concept is fundamental in maintaining accurate financial records and ensuring that expenses are properly accounted for in financial statements.

On the other hand, assets refer to resources owned by the business that can provide future economic benefits, credits typically reduce assets or increase liabilities and equity, and liabilities represent obligations the business owes to third parties. Understanding these distinctions is crucial for grasping the mechanics of financial accounting.