Garrison, Capital is classified as which type of account, and what is its normal increase side, according to the ledger excerpt?

• A. Asset, Dr.
• B. Revenue, Cr
• C. Expense, Dr
• D. None of the above, Cr.

Answer: (D)

Garrison, Capital represents owner’s equity. Equity accounts have a normal credit balance, so increases to this account are recorded on the credit side. The ledger excerpt showing increases for this capital item on the credit side confirms this classification, and it is not an asset, revenue, or expense. Therefore, the correct interpretation is that it isn’t one of those asset/revenue/expense types, and its normal increase is on the credit side. If the capital account were debited, that would decrease equity.