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Question
Which of the following accounts will not show a Debit balance?
Which of the following accounts will not show a Debit balance?
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Solution
The correct option is A Sales Account
The account Sales is credited because a corporation's sales of products will cause its stockholders equity to increase. A sole proprietorship's sales will cause the owners equity to increase.The Sales account is used in order to keep a tally of the sales made during an accounting year.
However, when the accounting year is completed, the credit balance will be moved via closing entries to the corporation's retained earnings account or in case of a sole proprietorship, to the owner's capital account.
The account Sales is credited because a corporation's sales of products will cause its stockholders equity to increase. A sole proprietorship's sales will cause the owners equity to increase.The Sales account is used in order to keep a tally of the sales made during an accounting year.
However, when the accounting year is completed, the credit balance will be moved via closing entries to the corporation's retained earnings account or in case of a sole proprietorship, to the owner's capital account.
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