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CA Foundation · Accounting · Accounting Process

Which of the following accounts will normally show a credit balance when balanced in the ledger?

Outstanding Expenses Account normally shows a credit balance because it represents a liability, an amount owed for expenses already incurred. Prepaid insurance and furniture are assets, and bad debts is an expense, so each of those carries a debit balance.

  1. AOutstanding Expenses AccountCorrect
  2. BPrepaid Insurance Account
  3. CFurniture Account
  4. DBad Debts Account

Explanation

Outstanding expenses are a liability, so the account carries a credit balance. Prepaid insurance is an asset, furniture is an asset and bad debts is an expense, so all three normally carry debit balances.

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