State BPA Fundamental Accounting Practice Exam

What is the normal balance of accounts payable?

1. Debit

2. Credit

3. Asset

4. Equity

The correct answer is: Credit

The normal balance of accounts payable is a credit balance. In accounting, accounts payable represents the amounts a company owes to its suppliers for purchases made on credit. This liability reflects future outflows of resources when the company settles its obligations. When a company purchases goods or services on credit, it records the transaction by increasing (crediting) accounts payable and decreasing (debiting) another account, typically an expense or inventory account. This mechanism ensures that the liabilities are accurately represented on the balance sheet. Maintaining a credit balance in accounts payable indicates that the company has outstanding obligations that it is expected to pay in the future. If accounts payable were to have a debit balance, it would suggest that the company has overpaid its suppliers or there has been some error in the accounting records, as accounts payable should naturally increase with outstanding debts rather than decrease. Thus, the normal credit balance of accounts payable aligns with its role as a liability in the accounting equation.