Credit Balance
What is a Credit Balance?
In accounting, a credit balance is an account balance that falls on the credit side of the account.
![crtb1](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb1.jpg)
How it Works
Credit Entries
The credit side of an account shows where money or value came from.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb2.jpg)
For example, if a business borrows money from a lender, money comes from a loan.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb3.jpg)
So when recording the the transaction, you credit the loan account.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb4.jpg)
This shows money came from the loan.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb5.jpg)
Supplier’s accounts work the same way.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb6.jpg)
If a business buys goods on credit, those goods come from a supplier.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb7.jpg)
To record the purchase, you credit the suppliers account.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb8.jpg)
This shows a value of goods came from the supplier.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb9.jpg)
Credit Balance
Some accounts have entries on one side of the account only.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb10.jpg)
In this case, the account’s balance is the total of these entries.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb11-1.jpg)
Other accounts will have entries on both sides.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb12.jpg)
For example, the credit side of the suppliers account will show the value of goods that have come from the supplier.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb13.jpg)
The debit side of the suppliers account will show how much the business has paid to the supplier.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb14.jpg)
The account’s balance is the difference between the two sides.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb15.jpg)
Typically, a supplier’s account will have a credit balance.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb16.jpg)
This is because a greater value of goods and services has come from the supplier than money has gone to it.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb17.jpg)
In other words, the account’s balance shows how much money is still owed to the supplier.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/crtb18.jpg)
© R.J. Hickman 2020