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:

Bad Debts Recovered

Amounts previously written off as uncollectible but later received or recovered, leading to an adjustment in the financial statements.

Accounts Receivable

Outstanding payments from customers to a business for delivered goods or services awaiting settlement.

Financial Statements

Reports that summarize an entity's financial position, performance, and cash flows, including balance sheet, income statement, and statement of cash flows.

Income Statement Approach

A method of calculating adjustments to income, focusing on items that affect the income statement directly.