The Normal Balance of an Account

question 42

Multiple Choice

The normal balance of an account:

• A)falls on the side where decreases are recorded.
• B)falls on the side where increases are recorded.
• C)must be computed after every transaction.
• D)cannot be computed in a manual accounting system.

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Definitions:

Accounts Receivable Subsidiary Ledger

An Accounts Receivable Subsidiary Ledger is a detailed ledger that contains individual accounts for all debtors, tracking their sales on credit and payments.

General Ledger

The general ledger is the primary accounting record of a company that uses double-entry bookkeeping, summarizing all transactions into accounts for financial statements.

Allowance for Doubtful Accounts

a contra-asset account that estimates the portion of accounts receivable that may not be collectible.

Trade Receivables

Trade receivables are amounts owed to a business by its customers resulting from the sale of goods or services on credit.