Debit balance

There are several meanings for the term debit balance. They are as follows:

  • Accounting. A debit balance is an account balance where there is a positive balance in the left side of the account. Accounts that normally have a debit balance include assets, expenses, and losses. Examples of these accounts are the fixed assets (asset) account, wages (expense) and loss on sale of assets (loss) account. Contra accounts that normally have debit balances include the contra liability, contra equity, and contra revenue accounts. An example of these accounts is the treasury stock (contra equity) account.
  • Bank account. A debit balance is a negative cash balance in a checking account with a bank. Such an account is said to be overdrawn, and so is not actually allowed to have a negative balance - the bank simply refuses to honor any checks presented against the account that would cause it to have a debit balance. Alternatively, the bank will increase the account balance to zero via an overdraft arrangement.
  • Debt. A debit balance is the remaining principal amount of debt owed to a lender by the borrower.
  • Investing. A debit balance is the amount of cash that a broker lends to an investor's margin account to purchase securities, and which the investor must pay into the account before the purchase transaction can be completed.

Related Courses

Bookkeeper Education Bundle 
Bookkeeping Guidebook