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:

Industrial Regulation

Oversight and rules established by government agencies to govern how businesses can operate in certain industries to promote fair practices and competition.

X-inefficiency

A situation where a firm operates with higher than necessary costs due to a lack of competition or other inefficiencies, not achieving maximum productivity.

Principal-agent Problems

Conflicts of interest and challenges in monitoring that arise in relationships where one party (the agent) is supposed to act in the best interest of another (the principal).

Paradox of Voting

The situation where individual rationality leads to a collective decision that is worse for everyone involved.