You’ll know very well the meaning of credit balance

The credit balance is defined as the final amount on the right side of the general ledger account or the sub-ledger account, so that there are many accounts that have a credit rating in accounting, and they are accounts whose value increases on the credit side and decreases in value on the debit side, or the credit balance may be For accounts that do not have a credit nature, but a decrease in their value occurred that led to a reversal of the nature of their account in the accounting entry, such as the decrease in the value of a specific asset that will certainly lead to its placement on the credit side, such as the payment of a certain amount from the fund; Where the fund is classified as having a debit nature, that is, it should be placed on the debit side, but due to a decrease in its value, it was placed on the credit side.

What are the most important examples of credit balances?

There are many examples of balances that are credit by nature, and the following are the most prominent of these balances, and the following is an explanation of each of them separately, as follows:

Liabilities Calculation

This account represents a group of accounts such as; Notes Payable, Wages Payable, Interest Payable, Income Tax Payable, Deferred Income Tax etc. The credit balance in the accounting records refers to amounts owed to vendors or a party other than your company or organization.

Equity account

This account includes shareholders’ equity in common stock, share capital, retained earnings and many other things similar to these accounts.

Revenue accounts

This account represents a group of accounts such as; Sales revenue, service revenue, interest income, etc.

Adverse asset accounts

This account includes accumulated depreciation and provision for doubtful debts accounts, and through these balances the necessary reports are prepared on the total and net amounts of receivables and property.

 

The most important examples of writing credit balances in accounting entries

There are many accounting entries that express the presence of credit balances, where the balance can be credit to several accounts. In the following example, the credit balance of the revenue account will be clarified, for both a simple accounting entry and a compound accounting entry in the following:

• An example of writing a simple accounting entry for a credit balance
  Company X received income from the fund of $25,000 on 5/7/2022, write the accounting entry:
  $25000 from h/box
  $25000 to h/ revenue 7/5/2022
  Revenue has been restricted to the creditor to increase it.
• An example of writing a compound accounting entry for a credit balance
  Company X received miscellaneous income from the fund in the amount of $14,000, which was distributed as follows: ($2000 interest income, $12,000 rental income) on 4/4/2004, write the accounting entry:
  $14,000 from h/box
  $12000 to h/ rent income 4/4/2004
  $2000 to h/ interest income 4/4/2004
  Revenue has been restricted to the creditor to increase it.

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