What is the normal balance for owner's equity accounts?

Owner's equity accounts typically have a normal credit balance. This is because owner's equity represents the ownership interest in a business, which is created through investments by the owners and retained earnings from the business's profits. When owners contribute capital or when the company earns profits, these actions increase equity and are recorded as credits.

In accounting, the normal balance refers to the side (debit or credit) that increases the account balance. For equity accounts, such as common stock and retained earnings, any increase is reflected in the credit column, and any decrease would typically be recorded as a debit. This is consistent with the fundamental accounting equation: Assets = Liabilities + Owner's Equity, which demonstrates that owner's equity is a vital component of the business's financial position and is expected to grow over time through positive operating results and additional capital contributions.

The understanding of other options provides additional context. For example, accounts that have a normal debit balance include assets and expenses, while liabilities also have a normal credit balance. Thus, saying "neither" or "it depends on the type of equity" would not accurately reflect the standard accounting treatment for owner's equity accounts.