An awareness of the normal balances of accounts would help you spot which of the following as an error in recording?
A) A debit balance in the dividends account
B) A credit balance in an expense account
C) A credit balance in a liabilities account
D) A credit balance in a revenue account

Question

Quizplus · Accepted Answer

Normally, expenses have debit balances and should be recorded as such. A credit balance in an expense account would indicate an error in recording the transaction. A debit balance in the dividends account is normal because it represents a reduction in retained earnings. A credit balance in a liabilities account is normal because it represents a source of funds for the company. A credit balance in a revenue account is normal because it represents an increase in the company's income.

An Awareness of the Normal Balances of Accounts Would Help