Definition of Credit Balance
In accounting and bookkeeping, a credit balance is an ending amount found on the right side of a general ledger account or subsidiary ledger account.
Examples of Credit Balances
A credit balance is generally and expected for the following accounts: - Liability accounts such as Accounts Payable, Notes Payable, Wages Payable, Interest Payable, Income Taxes Payable, Customer Deposits, Deferred Income Taxes, subsequently, a credit balance in Accounts Payable indicates the amount owed to sellers. (On the off chance that an obligation account would have a charge balance it indicates that the company has paid more than the amount owed, has made an erroneous section, and so on.)
- Equity accounts including the stockholders' equity accounts Common Stock, Paid-in Capital in Excess of Par Value, Retained Earnings, and the owner's equity account M. Smith, Capital
- Revenue accounts and gain accounts such as Sales Revenues, Service Revenues, Interest Revenues, Gain on Disposal of Equipment, Gain from Lawsuit, and many others
- Contra-resource accounts including Stipend for Dubious Accounts and Collected Devaluation. These credit balances allow for the reporting of both the gross and net amounts for accounts receivable and for property, plant, and equipment
- Contra-expense accounts such as Purchases Discounts, Purchases Returns and Allowances, and Expenses Reimbursed by Employees. The credit adjustments in these accounts permit the company to report both the gross and net amounts.
- The amount of cash or securities in a brokerage account that exceeds the payment amount needed to pay for securities purchases.
- The amount of money in a financial account that is agreeable to the account holder.
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