Normal Balance
Definition
The normal balance of an account is whether it normally has a debit or credit balance. Assets and expenses normally have debit balances. Liabilities, equity, and revenue normally have credit balances.
Example
Cash is an asset, so its normal balance is a debit. A negative cash balance is unusual and signals a possible problem.
Why It Matters
Knowing normal balances helps bookkeepers spot errors. If an asset has a credit balance or a liability has a debit balance, something may be wrong.