If You Decrease An Asset Account & You Credit It... What Is The Normal Balance?


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amber Jhon answered
Basically according to an accounting equation,

assets = liabilities + owners' equity

Now, when there is an increase in assets then assets are debited and if they are decreased then assets are credited. On the other hand, when liabilities or owners' equity are increased then they are credited while if they are decreased then they are debited.

According to the case you have mentioned above, if there is a decrease in assets and you credit it, then there must be a decrease in liabilities or owners equity to keep the normal balance. For example, if a company purchases inventory with cash then assets will decrease because of cash but again assets will increase when inventory will increase because it is also an asset. In this way the equation remains balanced.

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