Pāhonoa te oro

Understanding the natural account balance for liabilities and equity accounts It is important to understand the natural account balance for liabilities and equity. The natural or normal account balance refers to the side of the account that is positive or increasing. In the case of liabilities and equity, there are specific rules to follow:To increase a liability or equity account, you credit it. For example, when a business takes out a loan, you credit the loans payable account to indicate