Multiple Choice
Given the following year-end adjusted balances for Cruz Company as of December 31, which of the following journal entries correctly records the payment of accrued salaries of \$5,000?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
An account will have a credit balance if the:
A
total credits exceed total debits
B
total debits exceed total credits
C
total debits equal total credits
D
account is an asset account
Verified step by step guidance1
Understand the basic accounting equation: Assets = Liabilities + Equity. This equation helps us determine the nature of accounts and their normal balances.
Recall the normal balance of different types of accounts: Asset accounts typically have a debit balance, while liability and equity accounts typically have a credit balance.
Analyze the relationship between debits and credits: A credit balance occurs when the total credits in an account exceed the total debits. This is the key condition for an account to have a credit balance.
Apply this concept to the options provided: Evaluate each option to determine which one aligns with the condition for a credit balance. For example, 'total credits exceed total debits' directly matches the definition of a credit balance.
Eliminate incorrect options: For instance, 'total debits exceed total credits' would result in a debit balance, not a credit balance. Similarly, 'total debits equal total credits' would result in a zero balance, and 'account is an asset account' is unrelated to the credit balance condition.
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