A company started the year with a normal balance of $136,000 in the Inventory account.During the year,debits totaling $90,000 and credits totaling $110,000 were posted to the Inventory account.Which of the following statements about the Inventory account is correct?
A)The normal balance of the Inventory account is a credit balance.
B)After these amounts are posted,the balance in the Inventory account is a credit balance of $116,000.
C)The Inventory account is decreased by debits.
D)The debits and credits posted to the Inventory account caused it to decrease by $20,000.

Question

Quizplus · Accepted Answer

Inventory is an asset account and,as such,it has a normal debit balance.The Inventory account is increased with debits and decreased with credits.Beginning debit balance of $136,000 + debits totaling $90,000 − credits totaling $110,000 = Ending debit balance of $116,000.As a result,the Inventory account balance decreased by $20,000 during the year.

A Company Started the Year with a Normal Balance of $136,000