In financial accounting, which of the following accounts typically has a normal credit balance?

• A. Accounts Receivable
• B. Prepaid Insurance
• C. Accounts Payable
• D. Cash

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of normal balances in accounting. Asset accounts typically have a normal debit balance, while liability and equity accounts usually have a normal credit balance.
2. Step 2: Identify the nature of each account listed: Accounts Receivable and Prepaid Insurance are asset accounts, Cash is also an asset account, and Accounts Payable is a liability account.
3. Step 3: Recall that asset accounts (like Accounts Receivable, Prepaid Insurance, and Cash) normally have debit balances because they represent resources owned by the company.
4. Step 4: Recognize that liability accounts (like Accounts Payable) normally have credit balances because they represent obligations or debts owed by the company.
5. Step 5: Conclude that among the options given, Accounts Payable is the account that typically has a normal credit balance.