Which of the following statements is true of revenue?
A)Revenues decrease owner's equity, so a revenue account's normal balance is a credit balance.
B)Revenues decrease owner's equity, so a revenue account's normal balance is a debit balance.
C)Revenues increase owner's equity, so a revenue account's normal balance is a debit balance.
D)Revenues increase owner's equity, so a revenue account's normal balance is a credit balance.

Question

Quizplus · Accepted Answer

Revenues increase owner's equity, meaning they have a credit balance. This is why the normal balance for revenue accounts is a credit balance. Option A and B are incorrect because revenues actually increase owner's equity, not decrease it. Option C is incorrect because, as mentioned, revenue accounts have a credit balance, not a debit balance.

Which of the Following Statements Is True of Revenue