What is the normal balance of the Accounts Receivable account?

What is the normal balance of the Accounts Receivable account?

• A. Credit
• B. Debit
• C. Asset
• D. Liability

Answer: (B)

Assets, including Accounts Receivable, have a debit as their normal balance because increases to assets are recorded on the left side (debits) of the accounting equation. Accounts Receivable represents money owed to the company by customers, so it’s an asset. That’s why its normal balance is a debit. In practice, you debit Accounts Receivable when a sale is made on credit and credit it when cash is collected, which reduces the amount owed. This placement on the balance sheet as a current asset reflects its nature. The other options don’t fit: a credit is the normal balance for liabilities and equity, and “Asset” is a category rather than a balance direction.

Assets, including Accounts Receivable, have a debit as their normal balance because increases to assets are recorded on the left side (debits) of the accounting equation. Accounts Receivable represents money owed to the company by customers, so it’s an asset. That’s why its normal balance is a debit. In practice, you debit Accounts Receivable when a sale is made on credit and credit it when cash is collected, which reduces the amount owed. This placement on the balance sheet as a current asset reflects its nature. The other options don’t fit: a credit is the normal balance for liabilities and equity, and “Asset” is a category rather than a balance direction.