A knowledge 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

Expenses normally have debit balances, so a credit balance in an expense account indicates an error in recording. A debit balance in the dividends account is normal since dividends decrease retained earnings, which are part of stockholders' equity. A credit balance in a liabilities account is normal since liabilities represent amounts owed to others. A credit balance in a revenue account is normal since revenues increase retained earnings, which are part of stockholders' equity.

A Knowledge of the Normal Balances of Accounts Would Help