Which account type has a natural debit balance?

Which account type has a natural debit balance?

• A. Asset
• B. Liability
• C. Expense
• D. Revenue

Answer: (A)

In double-entry accounting, each account has a normal balance side. Asset accounts represent resources the business owns, and increases to assets are recorded with debits. Because debits add to the asset’s balance, assets have a natural debit balance. Liabilities and revenues are typically increased by credits, giving them a natural credit balance. Expenses also usually show a debit balance, but asset is the standard example of an account type that consistently exhibits a debit balance.

In double-entry accounting, each account has a normal balance side. Asset accounts represent resources the business owns, and increases to assets are recorded with debits. Because debits add to the asset’s balance, assets have a natural debit balance. Liabilities and revenues are typically increased by credits, giving them a natural credit balance. Expenses also usually show a debit balance, but asset is the standard example of an account type that consistently exhibits a debit balance.