Definition, Meaning & Synonyms
normal-balance
Financial Term
/ˈnɔːr.məl ˈbæl.əns/
Definition
The expected balance of an account based on its type, indicating where the balance is generally positive or negative.
Examples
- The normal balance of an asset account is a debit balance.
- Understanding normal balances is crucial for accurate financial reporting.
- Liabilities are credited to their normal balance, which is a credit.
Meaning
Normal balance refers to whether a particular account is intended to increase with certain types of transactions. For example, asset accounts typically have a normal debit balance, while liability accounts have a normal credit balance.
Synonyms
- Expected balance
- Standard balance
- Typical balance
