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NK Designer

Is debit balance positive and credit balance negative?

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  1. This answer was edited.

    Before answering the question you should first understand the meaning of debit and credit accounts.

    The images below might be of some helpUnderstanding of debit and credit account

    In the above equation, all the accounts covered on the left-hand side of the equation are classified as debit accounts and on the right-hand side are classified as credit accounts.

    Debit and Credit accounts

    Surplus, gains and revenue are credit accounts and expense, losses or deficits are credit accounts.

    Generally, All the debit accounts like plant and machinery, loan granted, sundry debtors, cash and the bank have a debit balance i.e they are most of the time positive.

    Similarly, all the credit accounts like the loan from a bank, sundry creditors, bills payable have a credit balance i.e they are most of the time negative as these accounts most of the time receive just credits.

    here we are simply analysing it based on numbers.

    Positive Debit Balance

    In simple terms, while balancing the ledger when the Debit side total > Credit side total the difference = Debit Balance. Most of the time, it maintains a “positive balance”.

    This is because when you add a debit to a debit it gives you a debit i.e when you add a positive number with another positive number you get a higher positive number and when you add a credit to debit it reduces the debit balance. But in most of the cases, it remains positive.

    We take up another example of a machinery account even though we credit the depreciation from that account the balance remains positive.

    Ledger Account

    Negative Credit Balance

    In simple terms, while balancing a ledger  Credit side total > Debit side total the difference = credit balance. All the credit accounts at most of the time maintain a credit balance i.e it has a “negative balance”. 

    This is because when you add a credit to another credit you get a higher balance of credit similarly when you debit the credit account it reduces the credit balance. But most of the time it still gives a credit balance i.e remains negative. But you do not put a negative sign while you account for it.

    The below-given ledger might be of some help to understand this better –

    Ledger having credit balance

    I hope you got your answer.


    Aastha Mehta.

     

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