[amp_mcq option1=”Debit balance” option2=”Credit balance” option3=”Nil balance” option4=”None of the above” correct=”option1″]
The correct answer is A. Debit balance.
Accumulated depreciation is a contra-asset account, which means that it is offset against the asset account it relates to. For example, accumulated depreciation for equipment is offset against the equipment account. This is because accumulated depreciation represents the portion of the asset’s cost that has been used up over time. As a result, accumulated depreciation has a normal debit balance.
A debit balance indicates that the account has a positive balance. This is because debits are used to record increases in assets, expenses, and contra-assets. A credit balance indicates that the account has a negative balance. This is because credits are used to record decreases in assets, revenues, and liabilities.
A nil balance indicates that the account has no balance. This can happen when the account has been used to record both increases and decreases in equal amounts.
Therefore, the normal balance of an accumulated depreciation account is a debit balance.