An Awareness of the Normal Balances of Accounts Would Help

question 126

Multiple Choice

An awareness of the normal balances of accounts would help you spot which of the following as an error in recording?

• A)A debit balance in the Dividends account
• B)A credit balance in an expense account
• C)A credit balance in a liabilities account
• D)A credit balance in a revenue account

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Definitions:

Economic Profit

Economic profit is the difference between total revenue and total costs, including both explicit and implicit costs.

Economic Loss

Represents a decrease in financial wealth, assets, or resources, often resulting from business operations or market changes.

Monopolistically Competitive Firm

A monopolistically competitive firm operates in a market structure where many companies sell products that are similar but not identical, allowing for limited pricing power and competition on quality and branding.

Economic Profits

The total revenue of a firm minus its explicit and implicit costs.