In normal balances of the different accounts we find the sum of the increases recorded in an account is usually equal to or greater than the sum of the decreases recorded in the account.  For this reason, the normal balances of all accounts are positive rather than negative.  For example, the total debits in an asset account will ordinarily be greater than the total of the credits.  Thus, asset accounts normally have a debit balance.  The rules of debits and credits and the normal balances of the various types of accounts are summarized as follows.  Note the drawing, dividends, and expense accounts are considered in the positive sense.  Increases in these accounts, which represents decreases in owner’s equity are recorded as debits.


                                                                 INCREASE     DECREASE     BALANCE



                        Asset                                      Dr.                    Cr.                    Dr.

                        Liability                                  Cr.                     Dr.                    Cr.

                        O.E./Stockholder E.                 

                                Capital  Cap Stock        Cr.                     Dr.                    Cr.

                                      Retained Earn          Cr.                     Dr.                   Dr.

                                Drawing Dividends      Dr.                     Cr.                    Dr.




                        Revenue                                 Cr.                     Dr.                   Cr.

                        Expenses                                Dr.                     Cr.                   Dr.



     When an account that normally has a debit balance actually has a credit balance and vice versa, it is an indication of an accounting error or of an unusual situation.  For example, a credit balance in the office equipment account could result only from an accounting error.  On the other side, a debit balance in an account payable account could result from an overpayment.


     We mentioned earlier about journals and accounts as a subject we have just been discussing.  The flow of accounting dates from the time that a transaction occurs to its recording in the ledger can be best exemplified by following the transaction - journal discussion.  This portion will explain in great depth the how and why of a transaction and its importance in the overall records keeping department.  Accurate records and detailed data is valuable in many given instances.


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