Which set of accounts below would have a normal debit balance?

• A. Liabilities and Equity
• B. Liabilities and Revenues
• C. Assets and Expenses
• D. Revenues and Equity

Answer: (C)

Verified step by step guidance

1. Understand the concept of normal balances: In accounting, accounts are classified as having either a normal debit balance or a normal credit balance. Assets and expenses typically have a normal debit balance, while liabilities, equity, and revenues usually have a normal credit balance.
2. Review the classification of accounts: Assets include items like cash, accounts receivable, and inventory. Expenses include costs incurred by the business, such as rent, utilities, and salaries. Both of these account types increase with debits and decrease with credits.
3. Analyze the options provided: Liabilities and equity, liabilities and revenues, and revenues and equity all have normal credit balances. Assets and expenses are the only account types listed that have a normal debit balance.
4. Relate the normal balance to the accounting equation: The accounting equation is Assets = Liabilities + Equity. Assets increase with debits, and expenses (which reduce equity) also increase with debits. This aligns with the normal debit balance for these accounts.
5. Conclude the reasoning: Based on the classifications and the accounting equation, the correct set of accounts with a normal debit balance is Assets and Expenses.