Question

At the end of each accounting period, before the books are closed, some ledger accounts have debit balances and others have credit balances.

At the end of the year, before any closing entries are made, which account typically has a debit balance?

Long-term Debt
Sales Revenue
Accounts Payable
Capital Stock
Dividends

Answer 1

Dividends typically have a debit balance at the end of the accounting period before closing as it signifies an expected payout to shareholders, contrary to liabilities and equity accounts which usually have credit balances.

Step-by-step explanation:

At the end of the accounting period, before any closing entries are made, the account that typically has a debit balance out of the options given would be Dividends. Considering the nature of different accounts, Long-term Debt, Accounts Payable, and Capital Stock usually hold a credit balance as they represent liabilities and equity respectively. In contrast, Sales Revenue also has a credit balance as it represents income earned by the company. A debit balance in Dividends indicates that a company has declared and is expected to pay dividends to its shareholders, which is a distribution of earnings, and decreases retained earnings within equity.