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If a company pays rent, it would debit the Rent Expense account. The debit balance can be contrasted with the credit balance. While a long margin position has a debit balance, a margin account with only short positions will show a credit balance. The credit balance is the sum of the proceeds from a short sale and the required margin amount under Regulation T. Regardless of what elements are present in the business transaction, a journal entry will always have AT least one debit and one credit. You should be able to complete the debit\/credit columns of your chart of accounts spreadsheet (click Chart of Accounts).<\/p>\n<\/p>\n
This general ledger example shows a journal entry being made for the payment (cash) of postage (expense) within the Academic Support responsibility center (RC). Revenues and gains are recorded in accounts such as Sales, Service Revenues, Interest Revenues (or Interest Income), and Gain on Sale of Assets. These accounts normally have credit balances that are increased with a credit entry. Understanding the nature of each account type and its normal balance is key to knowing whether to debit or credit the account in a transaction. Expenses are the costs a company incurs to generate revenue.<\/p>\n<\/p>\n
Because both accounts are asset accounts, debiting the cash account $15,000 is going to increase the cash balance and crediting the accounts receivable account is going to decrease the account balance. When we sum the account balances we find that the debits equal the credits, ensuring that we have accounted for them correctly. By understanding the normal balance concept, you can correctly record transactions, such as the cash injection and the equipment purchase, in your double-entry bookkeeping system.<\/p>\n<\/p>\n