When Computing the Normal Balance of an Account

question 48

Multiple Choice

When computing the normal balance of an account:

• A) salaries expense should have a credit balance.
• B) accounts payable should have a credit balance.
• C) equipment can have either a credit or debit balance.
• D) notes payable can have either a credit or debit balance.

---

Definitions:

Total Equity

The total net value of a company, calculated as total assets minus total liabilities; represents the owners' stake in the company.

Total Debt Ratio

A financial ratio that measures the extent of a company's leverage, calculated by dividing total liabilities by total assets.

Total Assets

The sum of all assets owned by a business, including current, fixed, and intangible assets, representing the total resources a company has at its disposal.