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:

    “Our normal waking consciousness, rational consciousness as we call it, is but one special type of consciousness, whilst all about it, parted from it by the filmiest of screens, there lie potential forms of consciousness entirely different.”
    —William James (1842–1910)

    “You need an infinite stretch of time ahead of you to start to think, infinite energy to make the smallest decision. The world is getting denser. The immense number of useless projects is bewildering. Too many things have to be put in to balance up an uncertain scale. You can’t disappear anymore. You die in a state of total indecision.”
    —Jean Baudrillard (b. 1929)