The format of the basic accounting equation can help you understand the normal or expected balances for the general ledger accounts. It will also assist you in understanding the type of entry required to increase an account balance. Here are the relevant points:
Examples of Debits and Credits in a Sole ProprietorshipLet's reinforce our debit and credit discussion by using five examples. In this section we will assume that the business is a sole proprietorship. (After these examples, we will illustrate the debit and credit entries for a corporation.)
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