# Is debit balance positive and credit balance negative?

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For a better understanding of the concept, let us first have an insight into the meaning of debit and credit accounts.

The following image shows the Balance Sheet Equation:

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.

In other words, Assets are classified as Debit accounts, which means that all the asset accounts would always have a debit balance.

On the other hand, Liabilities and Equity are classified as Credit accounts, which means that all Liability accounts and Capital account would usually have a credit balance.

The Income Statement Equation is given below:

In the Income Statement, Surplus, gains, and revenue are credit accounts, and expenses, losses, or deficits are debit accounts.

The Golden Rules of Accounting may also help in getting a better insight into the concept:

 NATURE OF ACCOUNT RULE Real Account Debit what comes in, Credit what goes out Nominal Account Debit all expenses and losses, Credit all incomes and gains. Personal Account Debit the Receiver, Credit the Giver.

## 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 a debit it reduces the debit balance. But in most cases, it remains positive.

Let us take up the example of a Plant and Machinery account. Even though we credit the depreciation from this account, the balance remains positive.

## Credit Balance

In simple terms, while balancing a ledger  Credit side total > Debit side total the difference = credit balance. All the credit accounts, most of the time maintain a credit balance i.e. they have 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. However, we do not put a negative sign while we account for it.

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

## Conclusion

The following are the key takeaways from the article:

• Assets are classified as Debit accounts, which means that all the asset accounts have a debit balance.
• On the other hand, Liabilities and Equity are classified as Credit accounts, which means that all Liability accounts and Capital account would usually have a credit balance.
• While balancing a ledger if the Credit side total > Debit side total the difference then there is a credit balance.
• However, while balancing the ledger when the Debit side total > Credit side total the difference there is a Debit Balance.

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