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In: Accounting

Which of the following statements is true of the Common Stock​ account? A. It is a...

Which of the following statements is true of the Common Stock​ account?

A. It is a liability account that has a normal credit balance.

B. It is a liability account that has a normal debit balance.

C.It is an equity account that has a normal credit balance.

D.It is an equity account that has a normal debit balance

Solutions

Expert Solution

Option (C) is correct

Common stock account is an equity account that has a normal credit balance.

Common stock denotes the capital contributions made by the stockholders.They are the persons who have the claims on the equity of the company, if the company goes into liquidation. Since, they provide the capital to the company, so they are creditors of the company too. That is why their balance normally, is a credit balance.  

ekkarill92 answered 2 years ago
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