Which statement is most accurate about determining account balances?

• A. Debits minus credits for all accounts
• B. Credits minus debits for all accounts
• C. The balance depends on the account type; assets and expenses typically have debit balances, while liabilities, revenues, and equity typically have credit balances
• D. The balance is the sum of debits and credits

Answer: (C)

In double-entry accounting, each account has a normal balance side that depends on the type of account. Increases to assets and to expenses are recorded on the debit side, so these accounts typically carry a debit balance. Increases to liabilities, revenues, and equity are recorded on the credit side, so these accounts typically carry a credit balance. The actual balance of any account is the net difference between the debits and credits recorded—whichever side is greater represents the account’s balance. This is why the statement that the balance depends on the account type, with assets and expenses usually having debit balances and liabilities, revenues, and equity usually having credit balances, is the most accurate. The other options misstate how balances are determined, since you don’t simply subtract one universal side from the other or add debits and credits together.