12. Which of the following accounts has a credit balance? O Prepaid Rent. O Land O Salaries
Expense. O Income Tax Payable.
Solution
Income Tax Payable has a credit balance.
Payable accounts are liability on the entity/individual. Income Tax Payable is the tax that has to
be paid by the entity/individual and thus a liabilty. According to the rules governing the
accounting entries, when liability increases it is credited.
All the other options are either assets (i.e. prepaid rent and Land) or expenses (salaries expense).
therefore they are all debit accounts..
12. Which of the following accounts has a credit balance O Prepaid R.pdf
1. 12. Which of the following accounts has a credit balance? O Prepaid Rent. O Land O Salaries
Expense. O Income Tax Payable.
Solution
Income Tax Payable has a credit balance.
Payable accounts are liability on the entity/individual. Income Tax Payable is the tax that has to
be paid by the entity/individual and thus a liabilty. According to the rules governing the
accounting entries, when liability increases it is credited.
All the other options are either assets (i.e. prepaid rent and Land) or expenses (salaries expense).
therefore they are all debit accounts.
