In accounting, a normal balance refers to whether an account’s balance is a debit or credit in a trial balance and T-Account.
Written By Kevin Mil - Author/Founder
What is a normal balance in accounting?
In accounting, a normal balance refers to whether an account’s balance is a debit or credit in a trial balance or T-Account.
For example, an asset account typically has a debit balance, while a liability account usually shows a credit balance.
We will explore other account classifications as we continue.
If you’re here, you’re likely confused about how normal balances work in accounting.
In accounting, there are five main types of accounts: Assets, Liabilities, Equity, Revenue, and Expenses.
Each has its own normal balance, and understanding these classifications is key to mastering normal accounting balances.
What is an example of an account that has a normal credit balance?
Liability, equity, and revenue accounts generally have normal credit balances, appearing on the credit side of the trial balance and as credits in T-accounts.
For example, when a company incurs a liability from purchasing goods, the accounts payable is credited to increase its balance.
A debit entry in accounts payable would reduce the balance.
What accounts normally have debit balances?
Asset and expense accounts typically have debit normal balances.
Examples include Cash in Bank, Receivables, Inventories, and other assets.
Expenses such as salaries, communication, taxes, and the cost of sales also follow this pattern.
These balances increase when debited in accounting entries.
What normal balance does an expense have?
If you understand the basic classification in accounting, you’ll see why an expense account typically has a debit balance.
For example, communication expenses fall under this category.
If an expense account shows a credit balance in the trial balance, it likely indicates multiple recording errors.
Illustration of Normal Balances in Accounting
The table below helps you easily memorize the normal balance of an account, indicating whether it’s a debit or credit.
If you ever forget, you can refer to this table as a quick reference or illustration.
| Type | Normal Balance | Includes |
| Asset Accounts | Debit | Cash in Bank, Accounts Receivables, Inventories, Etc. |
| Liability Accounts | Credit | Accounts Payable, Loans Payable, Other Payables, Etc. |
| Equity Accounts | Credit | Common Stocks, Preferred Stocks, Retained Earnings, Etc. |
| Revenue Accounts | Credit | Sales, Service Income, Interest Income, Etc. |
| Expense Accounts | Debit | Salaries and Wages, Communication Expenses, Etc. |
A debit balance appears on the left side of the trial balance, while a credit balance is shown on the right.
If an account’s normal balance is a debit, a credit entry reduces it.
Conversely, if an account’s normal balance is a credit, a debit entry reduces it.
For example, when a company incurs a liability from the delivery of purchased goods, it credits the Accounts Payable account to increase its balance.
You cannot make a debit entry in Accounts Payable as it would reduce the balance.
Similarly, if a company pays employee salaries via bank auto-debit (excluding taxes), the accounting entry would be a debit to the Salaries Expense account and a credit to Cash in Bank.
Since Salaries Expense has a normal debit balance, we increase it by debiting the account.
Conversely, as Cash in Bank has a normal debit balance and is being reduced, we credit the Cash in Bank account.