Normal Balance

Normal balance is the accounting classification of an account. It is part of double-entry book-keeping technique.

An account has either credit (Abbrev. CR) or debit (Abbrev. DR) normal balance. To increase the value of an account with normal balance of credit, one would credit the account. To increase the value of an account with normal balance of debit, one would likewise debit the account.

The fundamental accounting equation is the following:

Asset = Liability + Owner's equity

The account on left side of this equation has a normal balance of debit. The accounts on right side of this equation have a normal balance of credit. The normal balance of all other accounts are derived from their relationship with these three accounts.

Normal balance of common accounts:

  • Asset: Debit
  • Liability: Credit
  • Owner's Equity: Credit
  • Revenue: Credit
  • Expense: Debit
  • Retained Earnings: Credit
  • Dividend: Debit

Famous quotes containing the words normal and/or balance:

    “A few ideas seem to be agreed upon. Help none but those who help themselves. Educate only at schools which provide in some form for industrial education. These two points should be insisted upon. Let the normal instruction be that men must earn their own living, and that by the labor of their hands as far as may be. This is the gospel of salvation for the colored man. Let the labor not be servile, but in manly occupations like that of the carpenter, the farmer, and the blacksmith.”
    —Rutherford Birchard Hayes (1822–1893)

    “Both the man of science and the man of art live always at the edge of mystery, surrounded by it. Both, as a measure of their creation, have always had to do with the harmonization of what is new with what is familiar, with the balance between novelty and synthesis, with the struggle to make partial order in total chaos.... This cannot be an easy life.”
    —J. Robert Oppenheimer (1904–1967)