Multiple Choice
Which of the following accounts typically has a normal debit balance?
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2. Transaction Analysis
Journal Entries: Debits and Credits
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In double-entry accounting, what is the effect of crediting a liability account?
A
It increases the asset account balance.
B
It increases the liability account balance.
C
It decreases the owner's equity account balance.
D
It decreases the liability account balance.
Verified step by step guidance1
Understand the basic principle of double-entry accounting: every transaction affects at least two accounts, with debits equaling credits.
Recall the normal balances of different types of accounts: assets and expenses normally have debit balances, while liabilities, equity, and revenue normally have credit balances.
Recognize that crediting a liability account means increasing its balance because liabilities normally carry a credit balance.
Note that crediting a liability account does not directly affect asset or owner's equity accounts; it specifically increases the liability balance.
Therefore, the effect of crediting a liability account is to increase the liability account balance.
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