Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 47

For the following questions, circle the best response.

Which of the following groups of accounts all have debit balances?

a. Land, Equipment, and Paid-In Capital.

b. Accounts Receivable, Merchandise Inventory, and Salary Expense.

c. Notes Receivable, Dividends Payable, and Interest Expense.

d. Accounts Receivable, Accumulated Depreciation, and Buildings.

e. None of the above.

Step 1 of 2

The accounts which have a normal debit balance are those under assets and expenses while those with normal credit balances are liabilities and stockholders’ equity. The accounts with debit balances are inventory, accounts receivable and salary expense, since inventory and accounts receivable are assets accounts, while salary expense is an expense account.

The accounts of land and equipment have debit balances while paid-in capital is a stockholders’ equity account with a normal credit balance. The accounts of notes receivable is an asset account, interest expense an expense account while dividends payable is a liability account with normal credit balance. The accounts of accounts receivable and buildings are asset accounts, while accumulated depreciation is a contra asset account which has a normal credit balance.

The correct option is b i.e. Accounts receivable, merchandise inventory, and salary expense.