In accounting, an account balance is defined as what in accounting terms?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $24.99Unlock all

Prepare for the NAB CORE and RCAL Financial Exam with our comprehensive quiz featuring multiple-choice questions, hints, and detailed explanations. Strengthen your understanding and excel in your certification journey!

Multiple Choice

In accounting, an account balance is defined as what in accounting terms?

Explanation:
The balance of an account shows the net amount after recording debits and credits. It’s calculated as total debits minus total credits. If the result is positive, the account has a debit balance; if negative, a credit balance. This explains why an asset or expense account usually shows a debit balance, while a liability, equity, or revenue account usually shows a credit balance. For example, an asset with debits totaling 1,000 and credits totaling 300 results in a 700 debit balance. A liability with credits totaling 800 and debits totaling 200 results in a 600 credit balance.

The balance of an account shows the net amount after recording debits and credits. It’s calculated as total debits minus total credits. If the result is positive, the account has a debit balance; if negative, a credit balance. This explains why an asset or expense account usually shows a debit balance, while a liability, equity, or revenue account usually shows a credit balance. For example, an asset with debits totaling 1,000 and credits totaling 300 results in a 700 debit balance. A liability with credits totaling 800 and debits totaling 200 results in a 600 credit balance.

More Multiple Choice Questions
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy