A credit balance in a liability account indicates that an error in recording has occurred.

Name: A credit balance in a liability account indicates that an error in recording has occurred.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A credit balance in a liability account is actually quite common and does not necessarily indicate an error in recording. In fact, some liability accounts, such as prepaid expenses or unearned revenue, often have credit balances by their nature.

A Credit Balance in a Liability Account Indicates That an Error