What are the normal balances for assets, liabilities, and owner's equity?

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Multiple Choice

What are the normal balances for assets, liabilities, and owner's equity?

Explanation:
In double-entry accounting, each account type has a preferred side that increases it. Assets increase on the left side (debits), so assets have a debit-normal balance. Liabilities and owner's equity increase on the right side (credits), so they have credit-normal balances. This is why the correct statement is that assets have a debit-normal balance, while liabilities and owner's equity have credit-normal balances. For example, buying equipment debits the equipment asset, and taking out a loan credits the liability. The pattern stays consistent: assets are increased with debits, liabilities and owner’s equity are increased with credits.

In double-entry accounting, each account type has a preferred side that increases it. Assets increase on the left side (debits), so assets have a debit-normal balance. Liabilities and owner's equity increase on the right side (credits), so they have credit-normal balances. This is why the correct statement is that assets have a debit-normal balance, while liabilities and owner's equity have credit-normal balances. For example, buying equipment debits the equipment asset, and taking out a loan credits the liability. The pattern stays consistent: assets are increased with debits, liabilities and owner’s equity are increased with credits.

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