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    This post addresses debit and credit balance assumptions.

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    Maria Alvarez, a beginning accounting student, believes debit balances are favorable and credit balances are unfavorable. Upon what does Maria make this assumption? If you choose one over the other, what is your rationale?

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    Maria makes this assumption because assets carry a normal debit balance. When an asset account is debited, such as cash, inventory, or accounts receivable, the account balance increases from the debit. When an account is credited, the balance decreases. For example, when a sale is made on credit, the asset account is ...

    Solution Summary

    This solution provides a detailed explanation of why a beginning accounting student would believe that debit balances are favorable and credit balances are unfavorable. This discusses what this assumption would be based upon.