What term describes the normal debit or credit balance of an account?

• A. Debit balance
• B. Credit balance
• C. Normal balance
• D. Natural balance

Answer: (D)

In double-entry accounting, each account has a side that typically increases it, called its normal balance. This concept explains which side you expect to see on each type of account: assets, expenses, and owner’s draws normally carry a debit as their normal balance; liabilities, revenues, and equity normally carry a credit as their normal balance. The term describes the general tendency of an account’s balance, not the current amount. Debit balance or credit balance describe the actual current state for a given account, while normal balance identifies the side that is expected to increase the account. “Natural balance” isn’t a standard term in accounting.