State the normal balance side for each account type: asset, liability, equity, revenue, and expense.

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $25.99Unlock all

Study for the ACFE Accounting Terms Test with interactive quizzes. Prepare with multiple choice questions, each question accompanied by explanations and hints. Ensure your success with our study materials!

Multiple Choice

State the normal balance side for each account type: asset, liability, equity, revenue, and expense.

Explanation:
Normal balance means the side that increases the account in double-entry bookkeeping. For assets, increases are recorded as debits, so asset accounts have a normal debit balance. The same is true for expenses—debits increase them, giving expenses a normal debit balance. For liabilities, equity, and revenue, increases are recorded as credits, so these accounts have a normal credit balance. Put together, assets and expenses carry debit normals, while liabilities, equity, and revenue carry credit normals. (Note: some accounts can have opposite balances due to contra accounts, but the standard rule is as described.)

Normal balance means the side that increases the account in double-entry bookkeeping. For assets, increases are recorded as debits, so asset accounts have a normal debit balance. The same is true for expenses—debits increase them, giving expenses a normal debit balance. For liabilities, equity, and revenue, increases are recorded as credits, so these accounts have a normal credit balance. Put together, assets and expenses carry debit normals, while liabilities, equity, and revenue carry credit normals. (Note: some accounts can have opposite balances due to contra accounts, but the standard rule is as described.)

More Multiple Choice Questions
Subscribe

Get the latest from Passetra

You can unsubscribe at any time. Read our privacy policy