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:

    “You will be again as normal and selfish and heartless as anybody
    else.”
    —Louise Bogan (1897–1970)

    “The most perfect political community must be amongst those who are in the middle rank, and those states are best instituted wherein these are a larger and more respectable part, if possible, than both the other; or, if that cannot be, at least than either of them separate, so that being thrown into the balance it may prevent either scale from preponderating.”
    —Aristotle (384–322 B.C.)