State BPA Fundamental Accounting Practice Exam

Which of the following accounts would normally have a debit balance?

1. Liability Account

2. Revenue Account

3. Asset Account

4. Equity Account

The correct answer is: Asset Account

In accounting, the normal balance of an account refers to the side (debit or credit) that increases that account. Asset accounts typically have a debit balance because they represent resources owned by a business that can provide future economic benefits. When assets are acquired, their values are recorded as debits, which increase the asset account. Debiting an asset account adds to its balance, while crediting it subtracts from that balance. Therefore, the usual nature of asset accounts is to carry a debit balance, which reflects the value of the resources currently held by the company. In contrast, liability accounts usually have a credit balance, representing obligations that the company owes to outside parties. Revenue accounts also carry a credit balance because they reflect earned income that increases shareholder equity. Equity accounts, which show the owner's claim after liabilities are deducted from assets, can be more complex, but they generally maintain a credit balance as well. Consequently, asset accounts are the only ones typically associated with a debit balance.