Which Accounts Typically Have a Credit Balance?
Contents
Accounts that typically have a credit balance are:
1) Accounts Receivable
2) Notes Receivable
3) Prepaid Expenses
4) Unearned Revenues
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Accounts that typically have a credit balance
Assets, expenses, and owner’s equity accounts normally have a credit balance . The credit balance in these accounts indicates that they increased during the accounting period. The credit balance in an asset account is a contra account to the debit balance in the asset account.
Service revenue accounts
Service revenue accounts typically have a credit balance. This account is used to track revenue from services rendered, such as consulting or design work. The credit balance indicates that the company has earned money from these services.
Interest revenue accounts
Interest revenue is reported on the income statement as interest earned. This account has a credit balance.
Sales revenue accounts
Sales revenue accounts are the ones into which all sales will be initially recorded. The balance in the account will be a credit balance until the end of the accounting period, when it will be closed out to zero.
Accounts that typically have a debit balance
The chart of accounts is a record of all the accounts that a company uses in its accounting system. This includes all the accounts that are used to record transactions in the company’s financial statements. There are typically three types of accounts in the chart of accounts: asset, liability, and equity accounts.
Accounts payable
Accounts payable is a current liability account in which a company records the amounts it owes to suppliers for products and services purchased on credit. The amounts recorded in accounts payable represent the amounts the company will need to pay in the future for items or services it has already received. Accounts payable is reported on a company’s balance sheet as a liability.
In order for a company to record an amount in accounts payable, there must be two journal entries. The first journal entry is made when the company receives the products or services. The second journal entry is made when the company pays the amount owed.
Accounts payable is a type of short-term debt that a company incurs as it purchases goods and services on credit. Accounts payable is typically due within 30 days and therefore classified as a current liability on a company’s balance sheet.
Wages payable
Wages payable is an account that typically has a debit balance. This means that the account has more liabilities than assets.
Rent payable
Rent payable is an example of an account that typically has a debit balance. This is because when you owe rent, the amount you owe (the liability) is recorded as a debit on your balance sheet.
