Q1CA - Horngren'S Financial And Managerial Accounting

Question

In 35 words or fewer, explain the difference between a debit and a credit, and explain what the normal balance of the six account types is.

Step-by-Step Solution

Answer

The debit is the left side of the t-accounts, and the credit is the right side of the t-accounts. The normal balance of assets, expenses, and dividends is debit, while the normal balance of liabilities, revenue, and common stock is credit.

Step 1: Difference between the debit and credit

The major difference between debit and credit is that the debit is the left side of the t-accounts and the credit is the right side of the t-accounts of the business.

Step 2: Normal balance of various accounts

S No.	Account Type	Normal Balance
1	Assets	Debit
2	Expenses	Debit
3	Dividends	Debit
4	Liabilities	Credit
5	Revenues	Credit
6	Common Stock	Credit