What is Normal Balance?
Accounting normal balance is an accounting classification of an account that is part of the double entry bookkeeping technique (bookkeeping pair). So, in each account it has been estimated whether it is included in the debit or credit balance.
Types of Normal Balance in Accounting
There are two types of normal balances, namely normal debit balances and normal credit balances. The normal debit balance will increase in value if there is debit activity. Meanwhile, the normal credit balance will increase if there is credit activity.
To get these types of normal balances, consider the following examples of business cash accounts .
Since the example above is a cash account, the debit side is considered a normal balance. In this case, the discharge shows a positive value. To increase the value of a debit normal balance account, the account must be debited. And vice versa, if you want to increase your account's normal credit balance, then the account must be credited.
Normal Balance of Accounts in Financial Statements
In the financial statements, the following are several types of normal balances based on the type of transaction, along with its classification, whether it is credit or debit.
Many people ask which side the position of the normal balance in the financial statements is on. The answer is depending on the type of transaction. If it includes a normal debit balance, then it is on the left side, while if it includes a normal credit balance, it means it is on the right side.
Examples of Normal Debit and Credit Balances
In order to better understand what is meant by a normal debit and credit balance, consider the following example.
On January 1, 2022, A deposited IDR 800,000,000 in capital to the company .
On January 7, 2022, the company purchased a car for Rp. 200,000,000 and cash
On January 10, 2022 the company purchased a photocopier for Rp. 60,000,000 on credit.
On January 15, 2022, the company paid telephone charges of Rp. 1,000,000.
On January 18, 2022 the company received revenue from photocopying services of IDR 10,000,000.
On January 26, 2022, insurance was paid in the amount of IDR 1,000,000
On January 28, 2022, the company completed a photocopying service of IDR 5,000,000, but the money has not been received
What is the approximate normal debit and credit balance based on the example above?
Example of Normal Debit Balance
So based on the normal debit account balance example above, the recording is as follows:
1. Sweet normal
Equipment normal balance
Example of equipment normal balance
Example of Normal Credit Balance
Then based on the example above, the normal credit balance is as follows:
1. Normal balance of capital
example of normal balance of capital
2. Normal balance of income
Example of normal balance of income
From the example above, of course you can understand the types of normal accounting balances and their explanations, right? Hopefully this information is useful!
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