The normal balance of liability account is____________?
Correct answer: A. Credit balance
- A. Credit balance
- B. Debit balance
- C. Cash balance
- D. Neither debit nor credit balance
Explanation
Liabilities represent claims against the business and increase when credited, so their normal balance is credit. A debit usually reduces a liability balance.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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