For Capital, the category of account and its normal balance are:
A. Assests and a debit balance
B. Liabilities and a credit blance
C. Owner's Equity and a credit balance
D. Owner's equity and a debit balance
Owner's Equity and a credit balance
The correct answer is C. Owner's Equity and a credit balance.
To determine the correct answer for the category of account and its normal balance for Capital, we need to understand the nature of the account and its typical balance.
Capital is an account that represents the owner's investment in the business, also known as owner's equity. It includes the original investment made by the owner plus any additional investments made and retained earnings.
Now, let's clarify the concept of a normal balance. In accounting, each account has a normal balance, which is the side of the account where increases are recorded. The normal balance of an account determines whether debits or credits increase the account's balance.
Assets have a normal debit balance, meaning increases in assets are recorded as debits, while decreases in assets are recorded as credits. Liabilities have a normal credit balance, so increases in liabilities are recorded as credits, while decreases are recorded as debits. Owner's equity accounts typically have a normal credit balance, where increases are recorded as credits and decreases as debits.
Given this information, the correct answer is C. Owner's equity and a credit balance. Capital is a type of owner's equity account and, therefore, has a normal credit balance.