A Credit Balance in a Liability Account Indicates That an Error

question 6

True/False

A credit balance in a liability account indicates that an error in recording has occurred.

---

Definitions:

Assets and Liabilities

These represent a company's resources (assets) and obligations (liabilities).

Incoming Cash

Money received by an organization, representing inflows from various sources like sales, investments, or loans.

Assets

Economic resources or valuable items owned by an individual or business, expected to generate positive economic value.

Expenses

Outflows or other uses of assets or incurring of liabilities during a period from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major operations.