Which Account Has a Normal Debit Balance

question 114

Multiple Choice

Which account has a normal debit balance?

• A)Salaries Payable
• B)Common Stock
• C)Advertising Expense
• D)Service Revenue

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Definitions:

Retained Earnings

The portion of net profits not distributed as dividends to shareholders, but retained by the company for reinvestment in its core business or to pay debt.

Net Income

The amount of earnings left over after a company has paid all of its expenses and income taxes, indicating its profitability during a specific period, rephrased to provide a fresh perspective.

Cost of Equity

The return a company requires to decide if an investment meets its capital return criteria, essentially what it compensates investors.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set by multiplying each value by a predetermined weight before averaging.