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A credit is not a normal balance for what accounts?

Author:
Harold Averkamp, CPA, MBA

Definition of Credit Balance

A credit balance refers to the balance on the right side of a general ledger account or T-account.

Normally, the liability and owner’s (stockholders’) equity accounts have credit balances. In other words, their balances are on the right side of the accounts similar to their position in the accounting equation: assets = liabilities + owner’s equity. The revenue accounts (which are temporary accounts) also have credit balances because revenues cause the owner’s equity account balances to increase.

Contra asset accounts and contra expense accounts will also have credit balances.

Example of Accounts Where Credit is Not the Normal Balance

Accounts where a credit balance is NOT the normal balance include the following:

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

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