The following chart indicates the normal balance or how each part of the equation is increased.
Normal Balance Increased by | Accounting Equation (General Ledger) | ||
Debits (DR) | Assets | ||
Credits (CR) | Liabilities Fund Balance |
Now that we know what the normal balances are, let's take another look at the accounting equation.
- Assets - Liabilities = Fund Balance
restated, placing debits on side and credits on the other :
- Assets (DR) = Liabilities (CR) + Fund Balance (CR)
NOTE: Debits (DR) = Credits (CR)
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