Multiple Choice
Which of the following accounts has a normal credit balance under double-entry accounting?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
In financial accounting, the best interpretation of the word "credit" is the:
A
Left side of an account
B
Decrease to any account balance
C
Right side of an account
D
Increase to any account balance
Verified step by step guidance1
Understand that in financial accounting, every account has two sides: the left side called 'debit' and the right side called 'credit'.
Recognize that the term 'credit' specifically refers to the right side of an account, which is used to record certain types of transactions.
Know that whether a credit increases or decreases an account depends on the type of account (assets, liabilities, equity, revenue, or expenses).
Recall the basic rule: credits increase liabilities, equity, and revenue accounts, but decrease asset and expense accounts.
Therefore, the best interpretation of 'credit' is simply the right side of an account, as it is the fundamental definition regardless of the effect on balances.
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