Credit Balance

What is a Credit Balance?

Accounts can either have a credit balance or a debit balance depending on the type of account.

The expanded accounting equation is stated as follows:

Assets + Expenses = Liabilities + Owners Equity + Income

Items on the left are normally debits and items on the right are normally credits, so liabilities, equity, and income type accounts normally have a credit balance.

If an account which is normally a debit (assets and expenses) shows a credit balance then it usually indicates an error in the accounting system.

A full list of accounts can be seen on our debits and credits chart. If on the chart an account would normally be increased by a credit, then the account would normally have a credit balance.

For further information on the meaning of this term see the Wikipedia definition.

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Last modified January 29th, 2014 by Team

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