The Owner's Capital Account Normally Has A What?
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.
Comments