A credit balance in which of the following accounts would indicate a likely error?
A. Fees Earned
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B. Salary Expense
C. Capital Stock
D. Accounts Payable
Answer is B
All the expenses and assets are of debit nature when such expenses are incurred by the company. A credit balance of expenses does not show any transaction.
Hence, it shows an error.
Meaning of the four multiple choices
Fees earned refers to a revenue account that is placed in the revenue section at the top of the statement of income. Generally, fees earned is credited since it consist of the revenues, thus an increase in income is credited.
Salary expense typically stands for the expense of non-hourly labor for an organization. Since salary is an expense, it is debited.
Capital Stock refers to the amount of preferred and ordinary stocks that a firm is allowed to issue. Capital stock is credited since there is an increase in the credit account of the capital stock.
Accounts payable refers to the amount due to suppliers or vendors for services or goods received which are not yet been paid for. Accounts payable represents a liability account thus it is credited.