Under normal accounting rules, which type of account typically carries a credit balance?

Under normal accounting rules, which type of account typically carries a credit balance?

• A. Cash
• B. Revenue
• C. Accounts Receivable
• D. Accounts Payable

Answer: (B)

In accounting, each type of account has a normal balance side. Assets and expenses normally carry a debit balance, while revenues, liabilities, and equity normally carry a credit balance. Revenue is a type of income that increases the owner's equity, so it is increased with credits. When revenue is earned, you credit the revenue account and debit the corresponding asset (like cash or accounts receivable) to reflect the inflow. That makes revenue the classic example of an account that typically carries a credit balance. (Assets like cash and accounts receivable have debit balances, and a liability such as accounts payable also carries a credit balance, but the question points to the revenue type as the representative credit-balanced account.)

In accounting, each type of account has a normal balance side. Assets and expenses normally carry a debit balance, while revenues, liabilities, and equity normally carry a credit balance. Revenue is a type of income that increases the owner's equity, so it is increased with credits. When revenue is earned, you credit the revenue account and debit the corresponding asset (like cash or accounts receivable) to reflect the inflow. That makes revenue the classic example of an account that typically carries a credit balance. (Assets like cash and accounts receivable have debit balances, and a liability such as accounts payable also carries a credit balance, but the question points to the revenue type as the representative credit-balanced account.)