Multiple Choice
In a standard journal entry for a corporation, how is Common Stock normally recorded when shares are issued for cash?
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2. Transaction Analysis
Journal Entries: Debits and Credits
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Which of the following accounts normally has a credit balance?
A
Cash
B
Unearned Revenue
C
Accounts Receivable
D
Supplies
Verified step by step guidance1
Understand the concept of account balances: In accounting, asset accounts typically have a debit balance, while liability and equity accounts usually have a credit balance.
Identify the nature of each account: Cash, Accounts Receivable, and Supplies are asset accounts, which normally carry debit balances.
Recognize that Unearned Revenue is a liability account because it represents money received before services are performed or goods are delivered.
Recall that liability accounts normally have credit balances, meaning Unearned Revenue typically has a credit balance.
Conclude that among the given options, Unearned Revenue is the account that normally has a credit balance.
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