Which type of account generally has a debit balance?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $24.99Unlock all

Master the NOCTI Accounting Foundations Test with our comprehensive study resources. Utilize flashcards and practice questions complete with hints and explanations. Prepare effectively for your exam day!

Multiple Choice

Which type of account generally has a debit balance?

Explanation:
Asset accounts carry a debit balance because increases to assets are recorded with debits. Assets are resources owned by the business, and when you acquire more resources, you debit the asset account to show the increase. They decrease with credits. For example, buying equipment with cash increases the Equipment account (a debit) and decreases the Cash account (a credit). In contrast, liabilities, owners’ equity, and revenue are usually increased by credits, giving them credit balances. That pattern is why asset accounts are the ones that generally have debit balances.

Asset accounts carry a debit balance because increases to assets are recorded with debits. Assets are resources owned by the business, and when you acquire more resources, you debit the asset account to show the increase. They decrease with credits. For example, buying equipment with cash increases the Equipment account (a debit) and decreases the Cash account (a credit). In contrast, liabilities, owners’ equity, and revenue are usually increased by credits, giving them credit balances. That pattern is why asset accounts are the ones that generally have debit balances.

More Multiple Choice Questions
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy