If The Total Debits Exceed Total Credits In The Balance Sheet Columns Of The Worksheet, Then Owner's Equity Or If Total Credits Exceed Total Debits In The Balance Sheet Columns Of A Worksheet, Then There Is

If The Total Debits Exceed Total Credits In The Balance Sheet Columns Of The Worksheet Then Owner’s Equity Will Increase Beacuse The Net Income Has Occurred.

If the total debits exceed total credits in the balance sheet columns of the worksheet, then Owner’s Equity will surely increase as when the business earns Net Profits or Net Income which is added to owner’s equity, so owner’s equity increases. So, the business earns net profit or net income for the period.

Actually, when debits of balance sheet column of worksheet are greater than credits, then the difference of debits and credits of balance sheet column of worksheet is the Net Income which equalizes both debits and credits of balance sheet column of worksheet.

For example, if the net profit is Rs. 500000 for the period, then it means it is added to owner’s equity account, so it increase the owner’s equity.

If Total Credits Exceed Total Debits In The Balance Sheet Columns Of A Worksheet Then There Is?

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If The Total Credits Exceed Total Debits In The Balance Sheet Columns Of The Worksheet Then The Owner’s Equity Will Decrease Because The Net Loss Has Occurred

If the total credits exceed total debits in the balance sheet columns of a worksheet, then the business suffers the net loss for the period and as a result, the owner’s equity will surely decrease. Basically, the net loss is deducted from owner’s equity account that is why it decreases owner’s equity.

Actually, when the credits are greater than debits in the balance sheet sheet columns of worksheet, then to equalize both credits and debits columns of worksheet, the debit balance which is the Net Loss is entered in the debit column of worksheet.

For example, the net loss of Rs. 50000 for the period is deducted from owner’s equity as a result it decreases owner’s equity.