Debit balance

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1. Financial accounting.

In financial accounting a debit balance is an asset within the balance sheet, or an expense within the profit and loss account (or income statement).


Debit balance miscommunication
A common miscommunication between the functions of accounting and treasury is the different use of debits and credits. Accountants/controllers are used to posting journal entries where from a balance sheet perspective a debit signifies an increase in value, and a credit a reduction in value. However, for treasury staff a credit is an increase in value, and a debit a reduction. This simple difference is often cause for some awkward conversations between both professions.
The Group Treasurer, An ACT guide to the first 100 days, Page 9.


2. Banking.

In banking a debit balance - in the bank's records - is one which stands in favour of the bank.

The customer owes money to the bank.

Also known as an overdrawn balance.

(Contrasted with a credit, or positive, balance in the bank's records. Being a balance standing in favour of the customer.)


See also