Multiple Choice
In financial accounting, which type(s) of accounts increase with a debit?
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2. Transaction Analysis
Journal Entries: Debits and Credits
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Which of the following groups of accounts generally has normal credit balances under U.S. GAAP?
A
Liabilities, equity, and revenues
B
Equity, expenses, and dividends
C
Assets, liabilities, and expenses
D
Assets and expenses
Verified step by step guidance1
Understand the concept of normal balances in accounting: Each type of account has a normal balance, which is the side (debit or credit) that increases the account's value.
Recall that under U.S. GAAP, asset and expense accounts normally have debit balances, meaning they increase with debits and decrease with credits.
Recognize that liability, equity, and revenue accounts normally have credit balances, meaning they increase with credits and decrease with debits.
Note that dividends (or withdrawals) are contra-equity accounts and normally have debit balances, similar to expenses.
Therefore, the group of accounts that generally has normal credit balances includes liabilities, equity, and revenues.
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