There are also unexpected situations that result in asset accounts having credit balances. Here are five examples:
- An error caused by posting an amount to an incorrect account.
- Continuing to depreciate or amortize an asset after its balance has reached zero.
- Receiving and posting an amount that was greater than the recorded receivable.
- Expenses occurred faster than the agreed upon prepayments.
- The amount of checks written exceeded the positive amount in the Cash account.
Before issuing the balance sheet, any errors (such as items 1 and 2) need to be corrected. The accounts with credit balances in items 3, 4, and 5 need to be reclassified to the liability section of the balance sheet.
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