Multiple Choice
In journal entries using the debit/credit system, which type of account is increased with a credit?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
Which of the following accounts has a normal credit balance under double-entry accounting?
A
Supplies
B
Prepaid Insurance
C
Accounts Receivable
D
Unearned Revenue
Verified step by step guidance1
Understand the concept of normal balances in double-entry accounting: Assets and expenses typically have a normal debit balance, while liabilities, equity, and revenue accounts usually have a normal credit balance.
Identify the nature of each account listed: Supplies, Prepaid Insurance, and Accounts Receivable 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 have a normal credit balance, meaning increases are recorded on the credit side and decreases on the debit side.
Conclude that among the options, Unearned Revenue is the account with a normal credit balance.
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