Normal Account Balances in Accounting
2022-05-30
In double-entry bookkeeping, asset accounts typically carry a debit balance. When the value of assets increases, the asset account is debited, and when the value decreases, it is credited. By understanding the normal balance concept, you can correctly record transactions, such as the cash injection and the equipment purchase, in your double-entry bookkeeping system. Remember, the normal balance is the side (debit or credit) that increases the account. For liabilities, revenues, and equities, a credit does the job. Adherence to these norms is not merely a matter of convention but a functional necessity for the clarity and accuracy of financial data. Conversely, crediting an assetRead More →