In accounting, an account balance is defined as what in accounting terms?

In accounting, an account balance is defined as what in accounting terms?

• A. The sum of debits
• B. The sum of credits
• C. The difference between total debits and total credits
• D. The product of debits and credits

Answer: (C)

The balance of an account shows the net amount after recording debits and credits. It’s calculated as total debits minus total credits. If the result is positive, the account has a debit balance; if negative, a credit balance. This explains why an asset or expense account usually shows a debit balance, while a liability, equity, or revenue account usually shows a credit balance. For example, an asset with debits totaling 1,000 and credits totaling 300 results in a 700 debit balance. A liability with credits totaling 800 and debits totaling 200 results in a 600 credit balance.

The balance of an account shows the net amount after recording debits and credits. It’s calculated as total debits minus total credits. If the result is positive, the account has a debit balance; if negative, a credit balance. This explains why an asset or expense account usually shows a debit balance, while a liability, equity, or revenue account usually shows a credit balance. For example, an asset with debits totaling 1,000 and credits totaling 300 results in a 700 debit balance. A liability with credits totaling 800 and debits totaling 200 results in a 600 credit balance.