Question

Which of the following types of accounts have a normal debit balance?

1) Assets
2) Expenses
3) Liabilities
4) Equity

Answer 1

Types of accounts that have a normal debit balance are assets and expenses, while liabilities and equity have a normal credit balance.

Step-by-step explanation:

In accounting, the term "debit" refers to an increase in an account's balance. Therefore, accounts that have a normal debit balance are those that typically see an increase in value when debited. The types of accounts that have a normal debit balance are:

1. Assets: Assets are resources that a company owns, such as cash, inventory, or equipment. When an asset is increased, it is debited.
2. Expenses: Expenses are costs incurred to generate revenue, such as salaries, rent, or utilities. When an expense is recorded, it is debited.

On the other hand, liabilities and equity have normal credit balances, meaning they typically increase when credited.

For example, when a company borrows money (a liability), it is typically credited, and when a company earns profits (equity), it is credited.