Revenue A Normal Balance

In accounting terminology a normal balance refers to the kind of balance that is considered normal or expected for each type of account.

Revenue a normal balance. Five types of accounts are included here. An account has either credit abbrev. Normal balance is the accounting classification of an account. Have a normal balance amount that is normally a debit balance or a credit balance have a type and are classified as an asset liability equity revenue expense or draw are either a balance sheet or income statement account major types of accounts.

Revenue is normally a credit balance so a contra revenue account such as sales returns is normally a debit balance. This is the key to accounting and bookkeeping. The normal balance is part of the double entry bookkeeping method and refers to the expected debit or credit balance in a specified account. Sales revenue has a normal credit balance meaning that a credit to a revenue account.

For example accounts on the left hand side of the accounting equation will increase with a debit entry and will have a debit dr normal balance. Therefore revenue is cash in so it s a dr to cash and a cr to the income line. Assets formal definition the properties used in the operation or investment activities of a. To calculate the sales revenue the sales returns and the allowances must be subtracted from the old value.

Assets liabilities and equity as well as revenues and expenses. Let s illustrate revenue accounts by assuming your company performed a service and was immediately paid the full amount of 50 for the service. An asset is normally a debit balance so a contra asset account such as accumulated depreciation is normally a credit balance. You ve got to learn it to do decently.

Accounts with balances that are the opposite of the normal balance are called contra accounts. It is part of double entry book keeping technique. Cr or debit abbrev. For liability equity and revenue accounts the normal balance is a credit balance.

Using the normal balance. It can either be a debit balance or a credit balance. Therefore income accounts have a normal credit balance. Hence contra revenue accounts will have debit balances.

Contra revenue normal balance. For each account identify the type and its normal balance separated by a comma. To increase the value of an account with normal balance of credit one would credit the account.