Question

Accounts with credit balances cannot contain debit entries.

True

False

Answer 1

Answer: False

Accounts with credit balances are typically the revenue, contra expense, liability, and equity accounts. However, these accounts do contain both debit and credit entries. For example, a liability account like salaries payable will be credited for the accrued but unpaid salaries and hence will have a credit balance but when those salaries are paid, the salaries payable account will be debited. Thus, though it is an account with a credit balance, it also contains debit entries. Hence, the given statement is false.