A company started the year with a normal balance of $68,000 in the Inventory account.During the year the following amounts were posted to the account: Debits of $45,000 and credits of $55,000.Choose the TRUE statement.
A)After these amounts are posted,the balance in the Inventory account is a credit balance of $58,000.
B)The normal balance of the Inventory account is a credit balance.
C)The inventory account is decreased by debits.
D)The debits and credits posted to the Inventory account caused it to decrease by $10,000.

Question

Quizplus · Accepted Answer

The debits of $45,000 and credits of $55,000 result in a net decrease of $10,000 in the Inventory account. Therefore, option D is the correct statement. Option A is incorrect because a credit balance of $58,000 would occur only if the total credits exceeded the total debits by $58,000, but in this case, the opposite is true. Option B is incorrect because the normal balance of the Inventory account is a debit balance. Option C is incorrect because the Inventory account is increased by debits and decreased by credits.

A Company Started the Year with a Normal Balance of $68,000