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

---

Definitions:

Probability

The determination of an event's likelihood, represented numerically from 0 to 1.

Moral Hazard

A situation in which one party engages in risky behavior or lacks incentive to guard against risk because another party bears the consequences.

Adverse Selection

A phenomenon where parties at a disadvantage due to asymmetric information are selected against in a market transaction, often leading to market failure.

Unobservable Actions

Actions taken by individuals or entities that cannot be seen or measured directly, often inferring effects through outcomes or reports.