State BPA Fundamental Accounting Practice Exam

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True or False: Assets normally have a credit balance.

True

False

Assets typically have a debit balance, which means they are recorded on the left side of an accounting ledger. This is a fundamental principle in accounting that stems from the double-entry system, where every transaction affects at least two accounts. When assets increase, they are debited, and when they decrease, they are credited.

The reason assets usually carry a debit balance is that they represent resources owned by the business that provide future economic benefits. Conversely, liabilities and equity accounts typically carry a credit balance because they represent claims against the assets of the business. Therefore, stating that assets normally have a credit balance is inaccurate, as it contradicts the established rules of accounting. This reinforces the understanding that debts and equity are recorded differently from assets in financial statements.

Sometimes true

Always false

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