What account typically carries a credit balance?
Debit: The cash is deposited at the bank increasing the balance in the bank account. Credit: Physical cash held by the business reduces when deposited at the bank. It should be noted that the cash deposit bank journal entry simply transfers cash from one location to another, the asset the business has is always cash.
Answer. The debits and credits are shown in the following journal entry: Since cash was paid out, the asset account Cash is credited and another account needs to be debited. Because the rent payment will be used up in the current period (the month of June) it is considered to be an expense, and Rent Expense is debited.
(Rent that has been paid in advance is shown on the balance sheet in the current asset account Prepaid Rent.) Depending upon the use of the space, Rent Expense could appear on the income statement as part of administrative expenses or selling expenses.
A negative balance should arise relatively rarely….What is a Negative Balance?
Assets and expenses have natural debit balances. This means positive values for assets and expenses are debited and negative balances are credited. In effect, a debit increases an expense account in the income statement, and a credit decreases it. Liabilities, revenues, and equity accounts have natural credit balances.
What is debit balance and credit balance?
A credit balance is normal and expected for the following accounts: Liability accounts such as Accounts Payable, Notes Payable, Wages Payable, Interest Payable, Income Taxes Payable, Customer Deposits, Deferred Income Taxes, etc. Hence, a credit balance in Accounts Payable indicates the amount owed to vendors.