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

Question

Quizplus · Accepted Answer

Revenues increase equity, as they represent inflows of assets or settlements of liabilities that result in an increase in owner's equity. Therefore, a revenue account's normal balance is a credit balance. Option A and Option B are incorrect as they state that revenues decrease equity, which is not true. Option C is incorrect as it suggests that a revenue account's normal balance is a debit balance, which is not the case.

Which of the Following Statements Is TRUE of Revenues