Commerce Exam > Commerce Questions > Credit balance of ledger is _________.a)A rev...
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Credit balance of ledger is _________.
- a)A revenue or an asset
- b)A revenue or a liability
- c)An expense or an asset
- d)An expense or a liability
Correct answer is option 'B'. Can you explain this answer?
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Credit balance of ledger is _________.a)A revenue or an assetb)A reven...
A credit balance on a ledger account indicates a liability or a revenue.A credit balance is the ending amount found on the right side of a general ledger account or subsidiary ledger account. A credit balance is normal and expected for the following general ledger and subsidiary ledger accounts: • Liability accounts; for example accounts payable. • Equity accounts; for example common stock. • Revenue accounts; for example sales revenue. • contra- assets accounts; accumulated depreciations. • contra-expense accounts; purchases returns and allowances.
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Credit balance of ledger is _________.a)A revenue or an assetb)A reven...
Explanation:
A credit balance in a ledger account means that the amount of credit entries exceeds the amount of debit entries in that account. This indicates that the account has received more funds or credits than it has paid out or debited. The credit balance of a ledger account can be classified as a revenue or a liability.
Revenue: If the credit balance is due to the receipt of income or revenue, such as sales, commission, or interest, then it is classified as a revenue. This means that the company has earned more revenue than it has incurred expenses.
Liability: If the credit balance is due to a liability, such as accounts payable, accrued expenses, or unearned revenue, then it is classified as a liability. This means that the company owes more money to its creditors or customers than it has paid out.
In conclusion, a credit balance in a ledger account can be a revenue or a liability depending on the nature of the account. It is important for companies to keep track of their ledger balances to ensure that they have accurate financial records and can make informed business decisions.
A credit balance in a ledger account means that the amount of credit entries exceeds the amount of debit entries in that account. This indicates that the account has received more funds or credits than it has paid out or debited. The credit balance of a ledger account can be classified as a revenue or a liability.
Revenue: If the credit balance is due to the receipt of income or revenue, such as sales, commission, or interest, then it is classified as a revenue. This means that the company has earned more revenue than it has incurred expenses.
Liability: If the credit balance is due to a liability, such as accounts payable, accrued expenses, or unearned revenue, then it is classified as a liability. This means that the company owes more money to its creditors or customers than it has paid out.
In conclusion, a credit balance in a ledger account can be a revenue or a liability depending on the nature of the account. It is important for companies to keep track of their ledger balances to ensure that they have accurate financial records and can make informed business decisions.
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Credit balance of ledger is _________.a)A revenue or an assetb)A revenue or a liabilityc)An expense or an assetd)An expense or a liabilityCorrect answer is option 'B'. Can you explain this answer?
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