What is a Debit Balance?

Debit balance, an economic term, refers to how much money the debit has left.

Debit balance

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Debit balance, an economic term, refers to how much money the debit has left.

Under normal circumstances, asset accounts are increased on the debit side and reduced on the lender side (the opposite of the allowance account, such as accumulated depreciation); the opposite is the case for the liability category.

Accounts payable belong to the category of liabilities. In the debit balance, it represents a decrease, that is, payable payable. In the credit balance, it represents an increase, that is, payable unpaid.

The prepaid account belongs to the category of assets. In the debit balance, it represents an increase, which is also equivalent to a deposit. In the credit balance, it represents a decrease, and it is also quite payable.

The debit and credit bookkeeping method is a double-entry bookkeeping method that uses the words "borrow" and "credit" as accounting symbols to record changes in accounting elements. Therefore, this "borrowing" and "loaning" cannot be understood literally. "Borrowing" and "loaning" are not who owes whom. They are just a symbol and have no real meaning.

To learn the debit and credit method, we must first know that the object of the debit and credit method is the process and result of the increase and decrease of accounting elements, and assets, liabilities, and owner's equity are the main accounting elements.

Assets = Liabilities + Owners' Equity

This formula is the basis of the debit and credit method

The basic structure of the debit and credit method is: each account is divided into "debit" and "credit". Generally speaking, the left side of the account is defined as "debit" and the right side is "credit". Debiting an account to record economic business can be referred to as "debiting an account"; if the account's lender is recording economic business, it can be referred to as "crediting an account".

In accounting practice, "borrow" means the increase of assets and the decrease of liabilities and owner's equity; "loan" means the increase of liabilities and owner's equity and decrease of assets. Specifically, the increase in assets should be recorded in the debit of the relevant account of the asset class, and the decrease of assets should be recorded in the lender of the relevant account of the asset class; the increase in liabilities and owner's equity should be recorded in the lender, The decrease in owner's equity is recorded as a debit to its relevant account. Where the account has a debit balance, it is expressed as the balance of the asset. Where the account credit has a balance, it is expressed as the balance of liabilities and owner's equity. General asset accounts are debit balances, and liabilities and owner's equity are credit balances. Its structure is different.