Question

which of the following accounts typically have debit balances? which of the following accounts typically have debit balances? additional paid in capital - preferred treasury stock cash common stock

Answer 1

Treasury Stock and Cash typically have debit balances as Treasury Stock is a contra equity account and Cash is an asset account. Additional Paid-in Capital and Common Stock have credit balances as they are part of shareholders' equity.

Step-by-step explanation:

The question addresses the nature of account balances within the realm of accounting, which is a pivotal concept in business studies. In the double-entry accounting system, different types of accounts have either debit balances or credit balances as their normal balance. Understanding this is critical for accurate financial reporting and analysis.

Treasury Stock and Cash are two accounts that normally have debit balances. Treasury Stock represents stock that a company has repurchased from investors and has not retired. It is a contra equity account and therefore has a debit balance. Cash is an asset account, and all asset accounts typically have a debit balance.

In contrast, Additional Paid-in Capital and Common Stock are part of shareholders' equity and normally have credit balances. Additional Paid-in Capital represents the amount paid by investors above the par value of the stock, while Common Stock represents the equity stake distributed during fundraising through the issuance of stocks at par value.