Question

Which of the following lists of accounts includes only accounts that carry a normal debit balance?

a. Building, sales, accounts payable
B. Land, prepaid expenses, owner's draw
c. Supplies, supplies expense, owner's capital
d. Unearned revenue, rent expense, accounts receivable

Answer 1

The accounts that carry a normal debit balance are Land, prepaid expenses, and owner's draw.

Step-by-step explanation:

The correct answer is option B: Land, prepaid expenses, owner's draw. These accounts all have a normal debit balance.

• Land: When a company purchases land, the transaction is recorded as a debit to the Land account. This increases the balance of the account.
• Prepaid expenses: When a company pays for an expense in advance, such as insurance or rent, the transaction is recorded as a debit to the Prepaid Expenses account. This increases the balance of the account.
• Owner's draw: When the owner of a business withdraws personal funds from the business, the transaction is recorded as a debit to the Owner's Draw account. This increases the balance of the account.