Answered: Identify the normal balance (debit [Dr]…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter3: Processing Accounting Information

Section: Chapter Questions

Problem 3.6E: Normal Account Balances Each account has a normal balance. For the following list of accounts,...

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Question

Identify the normal balance (debit [Dr] or credit [Cr]) for each of the following accounts: __________ Owner. Withdrawals. ________ Utilities Expense.

Expert Solution

Step 1

In Book-Keeping, all ledgers accounts have either debit or credit balance and when debit side is higher than credit side, account is said to have debit balance whereas when credit side is higher than debit side, account is said to have credit balance.

Step 2

Owner’s Withdrawal: DEBIT or DR

Business owner invests money or assets as capital to initiate business that c credited as owner’s equity because it is liability of business towards owner under entity concept and when owner makes withdrawal, it reduces the liability and hence owner’s withdrawals has debit balance.

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