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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

LO3 Liability, owner’s equity, and revenue accounts normally have

  1. (a) debit balances.
  2. (b) large balances.
  3. (c) negative balances.
  4. (d) credit balances.

To determine

Identify the normal balance of liability, owner’s equity, and revenue account.

Explanation

Justification for the incorrect answer:

Option (a) is incorrect because liability, owner’s equity, and revenue account normally have credit balance not a debit balance.

Option (b) is incorrect because liability, owner’s equity, and revenue account normally have credit balance not a large balance.

Option (c) is incorrect because liability, owner’s equity, and revenue account normally have credit balance not a negative balance.

Justification for the correct answer:

Option (d)

Normal balance:

Normal balance refers to the excess of amount on one side, over the amount on the other side of an account. The excess amount of debit side over the credit side is shown as the normal debit balance...

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