Multiple Choice
Which of the following groups of accounts generally has normal credit balances under U.S. GAAP?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
In financial accounting, what is the normal balance of Accounts Payable?
A
Zero balance at all times
B
Credit
C
Debit
D
Either debit or credit, depending on the vendor
Verified step by step guidance1
Understand that the 'normal balance' of an account refers to the side (debit or credit) that increases the account's balance under the double-entry accounting system.
Recall that Accounts Payable is a liability account representing amounts a company owes to its vendors or suppliers.
Since liabilities increase with credits and decrease with debits, the normal balance of Accounts Payable is on the credit side.
Recognize that a debit balance in Accounts Payable would be unusual and might indicate an overpayment or error.
Therefore, the normal balance of Accounts Payable is a credit balance.
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