Question

Smart Touch Learning has a $16,500 balance in its Service Revenue account as of December 31. Because this is a revenue account the $16,500 balance is a debit balance.

A. True
B. False

Answer 1

The balance in the Service Revenue account is actually a credit balance, not a debit balance.

Step-by-step explanation:

The statement in the question is false. A debit balance in the Service Revenue account indicates that the account has a credit balance, not a debit balance.

Revenue accounts, such as Service Revenue, have normal credit balances, which means that increases to the account are recorded as credits and decreases are recorded as debits.

Therefore, a $16,500 balance in the Service Revenue account would be a credit balance, not a debit balance.