Question

A "t account" having a normal balance shows total debits of 75,000, and total credits of 100,000. What is the ending balance for this account and to which type of account does it relate?

1) Asset account with a credit balance
2) Liability account with a debit balance
3) Revenue account with a credit balance
4) Expense account with a debit balance

Answer 1

The ending balance for the T-account is $25,000 as a credit, which indicates that it is most likely a revenue account with a normal credit balance.

Step-by-step explanation:

When examining the provided T-account information, the ending balance can be determined by subtracting the total debits from the total credits. Since the provided T-account has total debits of $75,000 and total credits of $100,000, the ending balance is the difference, which is $25,000 in favor of credits.

The nature of the T-account, with more credits than debits, indicates that this account is not an asset account because asset accounts normally have a debit balance. Therefore, given the choices, the most suitable option is that this is a revenue account with a credit balance, as revenues increase on the credit side.