Normal Balance

Normal balance is the accounting classification of an account. It is part of double-entry book-keeping technique.

An account has either credit (Abbrev. CR) or debit (Abbrev. DR) normal balance. To increase the value of an account with normal balance of credit, one would credit the account. To increase the value of an account with normal balance of debit, one would likewise debit the account.

The fundamental accounting equation is the following:

Asset = Liability + Owner's equity

The account on left side of this equation has a normal balance of debit. The accounts on right side of this equation have a normal balance of credit. The normal balance of all other accounts are derived from their relationship with these three accounts.

Normal balance of common accounts:

  • Asset: Debit
  • Liability: Credit
  • Owner's Equity: Credit
  • Revenue: Credit
  • Expense: Debit
  • Retained Earnings: Credit
  • Dividend: Debit

Famous quotes containing the words normal and/or balance:

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    “... idleness is an evil. I don’t think man can maintain his balance or sanity in idleness. Human beings must work to create some coherence. You do it only through work and through love. And you can only count on work.”
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