Which of the following statements is true about an income ledger account?

Question

BlackTom AI · Accepted Answer

To evaluate the statements about an income ledger account, start by recalling the basic rule for income accounts: they carry a credit balance, and increases are recorded on the credit side.
Option 1: 'The account is increased by credit-side entries' aligns with the fundamental principle that income accounts rise with credits. This is a correct interpretation of how income is tracked in double-entry bookkeeping.
Option 2: 'It has a normal balance on the debit (left) side' contradicts the standard rule for income accounts, since the normal (typical) balance is on the credit side, not the debit side.
Option 3: 'The account is decreased by credit-side entries' is false because credits increase income, not decrease it; a decrease would occur with a debit.
Option 4: 'The account is increased by debit-side entries' also contradicts the normal accounting treatment, as debits reduce income or increase expenses, not increase income.
In summary, the true statement is the one that identifies credit-side entries as the means by which income accounts are increased, while the other options misstate the direction of impact or the normal balance.

ACB1120 - S1 2025 Practice Quiz Topic 3

Which of the following statements is true about an income ledger account?

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