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Owner’s Capital Normal Balance / Positive Balance / Favorable Balance In Accounting The Owner’s Capital Account normally has a credit balance in a T-Account . It increases normal side, which is a credit side or right side of t-account and decreases on the opposite of normal side i.e., left side of t-account. When owner’s capital has credit balance, then it means that total of credits is greater than total of debits in owner’s capital t-account. Similarly, if capital account has debit balance, then it means that the total of debits is greater than the total of credits. So, owner’s capital account has usually credit balance which is a usual, positive, favorable or normal balance for it while it has negative, unusual and unfavorable balance on debit side.

Office Supplies Expense Account And Office Supplies / Office Supplies On Hand / Office Supplies And Office Supplies Expense Account Adjusting Entry Affects Which Accounts? The adjusting entry for Office Supplies Consumed / Used during the period is shown below:                                                               Office Supplies Expense a/c  XXX                                                                                                                          Office Supplies a/c  XXX Office Supplies Expense Account is debited as it is used by the business during the period and office supplies or office supplies on hand is credited as some parts of office supplies are no longer to be existed in the business.

Is It True Or False That Currents Assets Are Expected To Acquire / Purchase By The Company Or Corporation Within One Year Or Less Than One Year? It is not true that Current Assets are Assets that a company expects to acquire within one year as these are used by the company to provide the probable future benefits upto one year or less to the business and not expect to acquire it for one year. Actually, the company or corporations acquired, owned and controlled the current assets from the date of acquisition or purchase and then used in the business with the expectation that it will provide probable benefits to the business and not to spend time of one year or less only in acquiring or purchasing the current assets.

The Adjusted Balance Of Accumulated Depreciation Would Appear In Which Columns Of Worksheet? Accumulated Depreciation appearrs in Trial Balance Credit, Adjusted Trial Balance Credit, And Balance Sheet Column Credit, which is a Contra Asset Account , is deducted from the cost of Fixed Assets on Balance Sheet . Accumulated depreciation has normal credit balance as it is the reversal of relevant fixed assets in order to find out the book value of fixed assets. So, it is credited in trial balance, adjusted trial balance and balance sheet column of worksheet.

Chart Of Accounts A list of accounts used by a business is called a Chart of Accounts . It is helpful to assign the numerical number to an Account in order to easily locate it in the Books of Accounts and Financial Statements .

Forensic Accountant And Forensic Accounting An accountant who combines accounting and investigating skills to uncover suspected fraudulent business activity, or to prevent such activity (before such activity takes place) is called as Forensic Accountant and the study of such Accounting is a Forensic Accounting. The main or primary purpose of forensic accountant is to preven fradulent activites and investigate such susptected fradulated activities which may occurr in the daily business working operations.

Is A Debit Entry Always Decreases / Increases The Balance Of An Account? A debit entry does not always decrease the balance of an Account . It all depends upon the Types of Accounts involved in a Transaction . For Liabilities, Owner’s Equity and Revenues, a debit entry always decreases the balances of these accounts but for Assets and Expenses Accounts, a debit entry always increases the balances of these accounts according to the Rules of Debits And Credits . Is A Credit Entry Always Increases / Decreases The Balance Of An Account? On the other hand, a credit entry always increases the balances of liabilities, owner’s equity and revenues but decreases the assets and expense accounts. So, we conclude to the question, “Why A Debit Entry / Credit Entry Always Decreases / Increases The Balance Of Liabilities, Owner’s Equity And Revenues And Increases Assets And Expense Accounts”? into two aspects as: As the normal, unsual, favorable or positive balance of liabilities, owne

If one Account is increased, another account on the same side of the Accounting Equation must be decreased. Examples include Assets Purchased For Cash or By Cheque / Check, Dividend Declared , etc. For example. Purchased Supplies for Cash Rs. 5000 is a Business Transaction . In that case, one Asset is Supplies and another is Cash. Here supplies account is increased by Rs. 5000, so we added it to assets side or left side of the accounting equation and cash is decreased by Rs. 5000, so deduct it from assets side of the Accounting Equation , but still the accounting equation remains in balance as shown below:                                                        Assets            =   Liabilities       +    Owner’s Equity                                                    +Supplies   -Cash   =            0                +                 0                                                    +5000         -5000    =           0                +                 0  

Amount To Be Received Or Collected From Customers In Future Due To Sales On Account Or Credit Sales Is What?  / Amounts To Be Received In The Future Due To The Sale Of Goods Or Services Is What? Amount to be received in the future due to the sale of goods (or sale of merchandise) or services is called Accounts Receivable or Sundry Debtor . Accounts receivable is created when goods or merchandise sold on account / credit i.e., Sales on Account or Credit Sales is made. It is a Current Asset  (having life equal to one year or less than one year)  and shown on the Balance Sheet at Net Realizable Value or Book Value . It is convertible into cash very quickly.

An Amount Recorded On The Left Side Of A T-Account Is A? An amount recorded on the left side of a T-Account is a debit side of an Account . Some accounts increase such as Assets and Expenses are increased on debit side and some accounts such as Revenues , Liabilities and Owner’s Equity are decreased on debit side. An Amount Recorded On The Right Side Of A T-Account Is A? An amount recorded on the right side of a t-account is a credit side of an account. Revenues, liabilities and owner’s equity increase on credit side, and assets and expenses are decreased on credit side.

The Owner's Capital Account Normally Has Credit Balance When an owner invests cash in a business, the Owner’s Capital Account is increased by a credit and not by a debit. Owner’s capital has normal balance on credit side or right side of T-Account , so it increases on credit side while it decreases on debit side or left side, which is opposite to normal side, of t-account. A decrease in the owner's capital account is recorded as a debit and an increse in it is recorded as a credit. So credit balance is a normal, usual, positive or favorable balance for owner’s capital account and debit balance is negative, unusual and unfavorable balance for it.

An Increase In Asset Is Recorded As A What? / An Increase In An Asset Is Recorded By A Debit An increase in Asset is recorded as a debit according to the Rules of Debit And Credit . Assets normally have debit balance on debit side of T-Account . A Decrease In Asset Is Recorded As A What? / A Decrease In An Asset Is Recorded By A Credit The decrease in asset is recorded by a credit as credit balance is unusual balance for assets, so these are decreased on the credit side of t-account.

In A T-Account The Normal Balance Of An Account Classification Is Always On The Debit Or Credit Side?   The normal or usual or positive or favorable balance of an Account is on the side which increases that account. For accounts i.e., Assets and Expenses , the normal balance is always on the debit side or left side of T-Account while for Revenues , Liabilities and Equity Accounts , the normal balance is always on the credit side of right side of t-account. The normal balance of an account is not the side which decreases that account i.e., opposite to normal side. For assets and expenses, unusual credit balance is always on the credit or right side of t-account which is unfavorable for these accounts. For revenues, liabilities and Owner’s Capital , owner’s equity or equity, the negative balance is always on the debit side which is unfavorable for these accounts.

When An Account Have A Debit Balance An Account is said to have a debit balance when the amount of debits exceeds the amount of credits in a T-Account . A debit balance is written on the credit side or the right side of t-account as the total of credits is less than the total of debits so to equalize these two totals i.e., debits and credit totals. So, we show the debit balance on the credit side.

An Aaccount Will Have A Credit Balance If The Credits Exceed The Debits An Account Will Have A Credit Balance If The Credits Exceed The Debits In A T-Account . When totoal of credits are greater than total of debits in a t-account, then there is a credit balance which is written on the debit side of t-account to equalize total of debits with total of credits. Revenue or Income , Liabilities ,   Owner’s Equity   and   Owner’s Capital have credit balances normally i.e., total of credit amounts are more than the total of debit amounts in these types of accounts.

A Credit Is Not The Normal Balance For Which Account Listed Below: Dividend Account (A Debit Is The Normal Balance For Dividend Account / Dividend Increases With Debits And Dividend Decreases With Credits) Dividend Account has normal balance on debit side, so it increases with a debit while it decreases on credit side of a T-Account as it has a negative or unfavorable credit balance. So, dividend account has a normal debit balance while it has unusual, negative or unfavorable credit balance on credit side of T-Account.

Office Supplies Unused Accounting Treatment The value of Office Supplies Unused Or Supplies On Hand is the value which remains unused during the period. There is no need to record the Office Supplies Unused Journal Entry as we record Office Supplies Used Adjusting Entry and after that we easily get the adjusting value of office supplies unused. For example, we have office supplies of Rs. 50000 purchased during the month (as the business has just started). Supplies of Rs. 10000 are consumed during the accounting period. What is the value of Office Supplies Unused at the end of the accounting period. As we used office supplies of Rs. 10000, so it is charged to office supplies expense account and we debit it and the part of office supplies used is credited as it is now longer to be existed in the business for using. So we record the following adjusting entry as shown below: Office Supplies Used Journal Entry                                                              Office

A Debit Is Not The Normal Balance For Which Account Listed Below: Service Revenue Service Revenue has normal balance on credit side or right side of T-Account . So debit side or left side is not the normal side for the service revenue. A Credit Is The Normal Balance For Which Account? On credit side or right side of t-account, service revenue increases and on debit side or left side of t-account, it decreases as on such side it has negative or unfavorable balance.

Assets And Withdrawals Are Increased By Debits Or Decreased By Credits Assets And Withdrawals Or Drawings Are Increased By Debits And Decreased By Credits While Revenues Are Increased By Credits Both Assets and Owner’s Withdrawals / Drawings have normal balances on debit side or left side of T-Account . So, these accounts are increased on debit side but decreased by credits as the credit side is unusual or negative side for these accounts. Revenues Are Increased By Credits And Decreased By Debits Revenues have normal balance on credit side or right side of T-Account, so these are increased by credits and decreased by debits as the debit side or the left side is unfavorable side for these accounts.

Withdrawals (Cash Or Goods Withdrawn By Sole Proprietor From Business For His Own Personal Use) Are Increased By What? Withdrawals are increased by a debit while decreased by a credit as the normal balance of owner’s withdrawals account is on left side or debit side of t account. So, withdrawals are increased on debit side of t-account. Withdrawals Are Decreased By What? Withdrawals or Drawings are decreased on the right side or credit side of T-Account as it is a side opposite to normal side where its balance decreases.

Retained Earnings Retained Earnings is decreased with a debit as the negative or unusual balance of retained earnings is on debit side while it increases with a credit as it has a normal or usual balance on credit side. In T-Account , the right side or credit side is the normal balance for retained earnings account where its balances increases while the left side or the debit side is the unusual side i.e., the side opposite to normal side, and it is the side where retained earnings balance decreases.

Rent Expense Rent Expense is an Expense Account , so it decreases with a credit as it has unusual balancne on credit side of T-Account while it increases on debit side of its t-account. So, the left side of rent expense t account is a normal balance for it and hence it increases on debit side while on the right side of rent expense t account, it decreases which is a n unususal side for it, so the balance of rent expense account decreases on credit side of rent expense t account.

Sales Revenue Sales Revenue increases with a credit as the credit balance is a normal or usual balance or positive balance for sales account while it decreases with a debit as it is an unsual balance or negative or unfavorable balance for it. Actually, sales has normal credit balance just like other revenues, so it increases on credit side of T-Account while it has negative or unusual or unfavorable balance on debit side of T-Account, so it decreases with a debit.

The following accunts are increased with a debit: (i) Land According to the Rules of Debit And Credit , Land Account increases (e.g., due to Purchase And Sale of Land ) with a debit as it is a Fixed Asset which has normal balance on debit side of a T-Account and decreases with a credit as it has unusual on credit side of a T-Account . (ii) Prepaid Rent Prepaid Rent  (when we paid it in advance) is a Current Asset which increases with a debit and decreases with a credit as it has normal or favorable balance on debit side and negative or unusual balance on credit side of a T-Account.

The part of supplies used during the accounting period is an Expense whose benefit is obtained by the business during the period. So, we debit supplies expense account and credit Supplies Account as a Current Asset as it is no longer to be existed in the business. Supplies Used Adjusting Entry / Supplies Expense Journal Entry                                                                           Supplies Expense a/c  XXX                                                                                                                           Supplies a/c  XXX                                                                                      (Supplies Used For The Period)   The remaining amou nt of supplies account, which is unused for the period, is Supplies on Hand and still consider as a Current Asset of the business.

If Income Summary Has A Credit Balance Then The Closing Entry For It Will Include What? If Income Summary has a credit balance after Revenues and Expenses have been closed into it, the closing entry for income summary will include a credit to the owner’s capital account as income summary account is closed to capital account in case of sole proprietorship. Income summary has a credit balance means that revenues are greater that expenses, so there is a Net Income / Net Profit for the period. If expenses are greater than revenues, then this is the case of net loss and income summary account has a debit balancee. So, in case of net loss, we credit income summary account and a debit to owner’s capital account in order to transfer it to capital account.