PRC-1 · Chapter 3 · Question 42 of 100
When reviewing the final trial balance of 'Metro Enterprises', a newly hired accountant notes an unknown ledger account displaying a debit balance. According to the fundamental rules of double-entry, this balance could represent which of the following?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) An asset or an expense
Explanation
In double-entry bookkeeping, asset accounts and expense accounts natively carry debit balances. Liabilities, equity (capital), and income accounts carry credit balances.
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