What is the normal balance for an account?
Saturday, July 2, 2011 at 4:32PM A normal balance is the expectation that a particular type of account will have either a debit or a credit balance based on its classification within the chart of accounts. It is possible for an account expected to have a normal balance as a debit to actually have a credit balance, and vice versa, but these situations should be in the minority.
The normal balance for each account type is as follows:
| Account Type | Normal Debit Balance | Normal Credit Balance |
| Asset | Yes | |
| Contra Asset | Yes | |
| Liability | Yes | |
| Contra Liability | Yes | |
| Equity | Yes | |
| Contra Equity | Yes | |
| Revenue | Yes | |
| Contra Revenue | Yes | |
| Expense | Yes | |
| Gain | Yes | |
| Loss | Yes |
A contra account contains a normal balance that is the reverse of the normal balance for that class of account. The contra accounts noted in the preceding table are usually set up as reserve accounts against declines in the usual balance in an account. For example, a contra asset account such as the allowance for doubtful accounts contains a credit balance that is intended as a reserve against accounts receivable that will not be paid. The contra equity account usually refers to treasury stock, which is stock that has been bought back by the company, and so carries a normal balance that is the reverse of the normal balance for an equity account.
Similar Terms
A normal balance is also known as a normal account balance.
Related Topics
How do I reconcile an account?
What is a reconciliation statement?
What is a suspense account?
What is an account?
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