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    Normal debit balances on credit side of accting equation

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    Explain in your own words on why you believe that the statement below is true:

    1. Some liability and equity accounts have normal debit balances or increase with debits instead of credits. But these accounts are all found on the credit side of the accounting equation.

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    Solution Preview

    Yes, there are a couple of accounts in the liability and equity sections of balance sheets that don't follow the rules of all the other accounts in those two sections.

    One is Dividends which will always have a debit balance, if it has any transactions. It is a reduction of an equity account ...

    Solution Summary

    The solution presents three particular accounts which are on the credit side of the accounting equation, but have normal debit balances. Each is explained for what it is and why it is separately shown from its credit partner.