Normal Balances of Accounts

The sum of the increase recorded in an account is customarily equal to or greater than the sum of the decreases recorded in the account; consequently; the normal balances of all accounts are positive rather than negative. For example, the total debit (increases) is an asset account will ordinarily be greater than the total credits (decreases); thus asset accounts normally have debit balances. It is entirely possible, of course, for the debits and the credits in an account to be equal in which case the account is said to be in balance.

The rules of debit and credit, and the normal balances of the various types of accounts, are summarized below. Note that drawing and expense accounts are considered in the positive sense. Increases in both types of accounts, which represent decreases in capital, are recorded as debits.

Type of Accounts       Increase          Decrease        Normal Balance

Asset                Debit                Credit                           Debit

Liability            Credit               Debit                            Credit

Capital             Credit               Debit                            Credit

Drawing           Debit                Credit                           Debit   

Income             Credit               Debit                            Credit

Expense           Debit                Credit                           Debit

When an account that normally has debit balance actually has credit balance, or vice versa, it is an indication of an accounting error or of an unusual transaction. For example, a credit balance in the office equipment account could result only from an accounting error. On the other hand, a debit balance in a creditor’s account could result from an overpayment.