Why would an expense account have a credit balance?
So, yes you can have a credit balance on an expense account – that happens when an adjustment has to be made that has a credit impact on the P&L, and the credit amount is bigger than the debit balance on the expense account.Click to see full answer. Also to know is, does an expense…
So, yes you can have a credit balance on an expense account – that happens when an adjustment has to be made that has a credit impact on the P&L, and the credit amount is bigger than the debit balance on the expense account.Click to see full answer. Also to know is, does an expense account have a credit balance?Expense accounts normally carry a debit balance, so a credit appears as a negative number.Likewise, what kind of account has a credit balance? A credit balance is normal 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, etc. Hence, a credit balance in Accounts Payable indicates the amount owed to vendors. Besides, what does it mean to credit an expense account? Definition of expense accounts A debit to an expense account means the business has spent more money on a cost (i.e. increases the expense), and a credit to a liability account means the business has had a cost refunded or reduced (i.e. reduces the expense).Why would prepaid insurance have a credit balance?Several situations could cause a credit balance in the asset account Prepaid Insurance. If one of the $600 payments is debited to Insurance Expense (or another account) instead of Prepaid Insurance, the monthly adjusting entries will cause the balance in the Prepaid Insurance account to become a credit balance.
