Sally observes that the cash account is an asset account and has a debit balance. She also notices that inventories account is an asset account and has a debit balance. Therefore, Sally comes into conclusion that all asset accounts have a debit balance. Which approach does Sally use in developing her theory about all asset accounts having a debit balance?
A) Deductive reasoning.
B) Inductive reasoning.
C) Conceptual reasoning.
D) Conclusive reasoning.

Question

Quizplus · Accepted Answer

Sally is making a generalization based on specific observations. This is the process of inductive reasoning, where specific facts lead to a general conclusion. Deductive reasoning involves starting with a general principle and drawing specific conclusions from it. Conceptual reasoning involves using abstract or theoretical ideas to make conclusions, and conclusive reasoning involves drawing firm conclusions without the need for further evidence.

Sally Observes That the Cash Account Is an Asset Account