State BPA Fundamental Accounting Practice Exam

Which of the following accounts normally has a debit balance?

1. Revenue accounts

2. Liability accounts

3. Expense accounts

4. Equity accounts

The correct answer is: Expense accounts

The account that normally has a debit balance is the expense account. In accounting, the basic principles of double-entry bookkeeping dictate that expenses decrease equity when incurred. This means that when expenses are recorded, they are entered as debits, which increase the amount in the expense account. Consequently, the expense account consistently maintains a debit balance, reflecting the total expenses incurred by an entity. In contrast, revenue accounts, liability accounts, and equity accounts typically maintain credit balances. Revenue accounts represent income earned by the entity, which increases equity and therefore carries a credit balance. Liability accounts, which reflect obligations the company has to external parties, also have a credit balance since they signify amounts owed. Finally, equity accounts represent the owners’ interest in the business, and contributions to equity from owners or profits retained in the business are credited to these accounts, maintaining a credit balance. Understanding these fundamental concepts aids in accurately interpreting account balances and recording transactions in financial statements.