Thus, liability accounts have credit balances too. When accounting for personal accounts (the accounts which are related to a person or a company), the accountants should debit the party that receives the payment and credit the party that make the payment (Also see How Do Accountants Carry Out the Accounting Process?). There are a few types of liability account, such as the accounts for current liability, non-current liability, as well as financial instrument payable. On the other hand, liabilities refer to the dues that arise from transactions that the company has an obligation to fulfil. Hence, the accounts that are revenue in nature, for example, sales, commissions, capital gains and interest income have a credit balance. The basic rules of bookkeeping (Also see Vital Elements in Bookkeeping) require the accountants to debit all business transactions in the nature of expenses, as well as credit those that with the nature of income. Income refers to the revenues and gains that the company has earned from its operating and non-operating activities. Instead, hiring an bookkeeping f irm in Singapore will be a better choice for you.Īccording to the basic accounting principles, the ledger accounts that typically have credit balances are the ledger accounts of income, liabilities, provisions, reserves, capital and others. If you do not know the normal balances of the accounts, you should not attempt to do the bookkeeping-related tasks on your own as you may end up confusing yourself. As against, a credit balance is an extra amount on the credit side when compared to the debit side. Do you know that some accounts will usually have debit balances, while some will typically have credit balances? In accounting, having a debit balance (Also see Which Ledger Accounts Will Normally Have Debit Balances?) means that the amount on the debit side of the ledger will be greater than that of the credit side.
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