Question

Boyd Docker has just rented space in a strip mall. In this space, he will open a photography studio, to be called SnapShot! A friend has advised Boyd to set up a double-entry set of accounting records in which to record all of his business transactions. Indicate whether the normal balance of each account is a debit or credit.

Answer 1

Answer:

The normal balance of each account will depend on the type on account involved.

Explanation:

The double-entry system of accounting imlpies that transactions recorded shlooud involve two movements; a corresponding debit entry for a credit entry, though some transactions have more than two entries.

However, by way of rule, a normal balance increases the account and on the opposite of that account, the amount decreases so as to obtain a balance in its rightful position.

Thus, asset accounts will have debit balances, liabilities and capital accounts will have credit balances, income account will have credit balances due to its additional effect on capital, while expenses and withdrawals will have debit balances because they reduce capital.