Natural Balance (2.2)

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10 Terms

1
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Natural Balance

The expected type of balance (either a debit or a credit) for a specific account classification.

2
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How to determine a debit balance

If the total debits exceed the total credits in an account, it results in a debit balance.

3
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How to determine a credit balance

If the total credits exceed the total debits in an account, it results in a credit balance.

4
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How increases relate to natural balance

Increases take place on the same side as the natural balance (e.g., an account with a natural debit balance is increased by debits).

5
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How decreases relate to natural balance

Decreases occur on the opposite side of the natural balance.

6
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Natural Balance for Assets

Debit

7
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Natural Balance for Liabilities

Credit

8
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Natural Balance for Equity

Credit

9
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Natural Balance for Revenues

Credit

10
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Natural Balance for Expenses

Debit