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What is meant by the "normal balance" of an account?
AThe average of the debit and credit totals
BThe side, debit or credit, on which increases are recorded
CThe balance after closing entries are posted
DWhichever side currently holds the larger total
Answer & Solution
Correct answer: B. The side, debit or credit, on which increases are recorded
1. An account's running balance accumulates in either the debit or the credit column.
2. The normal balance is whatever it takes to increase that type of account.
3. It is therefore the side on which increases are recorded, where the running total is kept.
4. It is not an average (B), not defined by closing (C), and not just the larger side (D).
5. Therefore the normal balance is the side on which increases are recorded.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.3.6 "Normal Balance", p.18_
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