Accounting Fundamentals Certification (AFC) 2025 – 400 Free Practice Questions to Pass the Exam

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If both the previous account balance and current entry posted to an account are debits, what is the nature of the new account balance?

It is a credit

It remains a debit

The nature of accounting follows specific rules regarding debits and credits. When an account has a debit balance, it means that the total of the debits exceeds the total of the credits recorded in that account. If both the previous balance and the current entry posted to that account are debits, it means that additional amounts are being added to the existing debit balance.

In double-entry accounting, debits increase the balance of accounts that naturally have a debit balance, such as assets and expenses. Therefore, if we start with a debit balance and add another debit to it, the total balance will still be a debit, simply increasing in amount.

Consequently, the new account balance remains a debit, confirming that the correct answer truly reflects the underlying accounting principles.

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It becomes zero

It is assumed to be incorrect

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