Question

The balance of an account is determined by

(A) adding all of the debits to all of the credits
(B) adding all of the debits, adding all of the credits, and then subtracting the smaller sum from the larger sum
(C) always subtracting the debits from the credits
(D) always subtracting the credits from the debit

Answer 1

Answer:

(B) adding all of the debits, adding all of the credits, and then subtracting the smaller sum from the larger sum

Explanation:

While calculating the closing balance of any account,

There includes two possibilities that the account might have debit balance or the account might have credit balance. And for computing this:

All the debits shall be accumulated and then their total shall be computed.

Similarly, all the credits shall be accumulated and their total shall be done.

Which ever is more then the account will have that nature of balance, accordingly the smaller shall be deducted from the larger one and the larger one will decide the nature of balance whether debit or credit.