Bookkeeping – Debits and Credits in Equity Accounts (Lesson 10)

Equity Accounts

The equity section of the balance sheet identifies the approximate dollar value of net worth accrued to the owners/investors.  Equity type accounts can have both credit and debit balances.  By far the most preferred is a credit value.  Debit values does not mean that something is wrong, actually it can be a great sign of a good operation.