Normal Balance Rules

What Is a Normal Balance?

Every account has a normal balance — the side (debit or credit) that increases the account. Recording on the opposite side decreases it.

The Rules

Debit-Normal Accounts (increase with debits)

Assets (Classes 2, 3, 5 and asset accounts in 4) — you debit to increase
Expenses (Classes 6, 8 charges) — you debit to increase

Credit-Normal Accounts (increase with credits)

Liabilities (Class 1 liabilities, liability accounts in 4) — you credit to increase
Equity (Class 1 equity) — you credit to increase
Revenue (Classes 7, 8 products) — you credit to increase

Quick Reference

| Account Type | Normal Balance | To Increase | To Decrease | |-------------|---------------|-------------|-------------| | Asset | Debit | Debit | Credit | | Expense | Debit | Debit | Credit | | Liability | Credit | Credit | Debit | | Equity | Credit | Credit | Debit | | Revenue | Credit | Credit | Debit |

Contra Accounts

Some accounts have the opposite normal balance of their category. For example:

Accumulated depreciation (28xx) is an asset account but has a credit normal balance — it reduces the gross asset value
Inventory provisions (39) also carry a credit balance

Memory Aid

Think of the accounting equation expanded:

$A + E_{xp} = L + Eq + R_{ev}$

Everything on the left of the equation is debit-normal. Everything on the right is credit-normal.