Does a credit balance have a minus sign in front?

Answer 1

The credit balance is a positive real number and as such it should not have a minus sign in front.

Accounting:

If this is about an asset, then this is an amount you owe (you do not have and you are liable to) otherwise if this is for a liability, then this is an amount others owe to you. Example: a credit balance in a tellers (cashier) account is not having a minus in front of it (since it is a positive number) but it means that the cashier is owing money to the till, since the cashier's account is an asset.

If you want to reverse a credit balance then you CREDIT again the same amount with a minus in front (you shall NOT debit the same amount, as this is another transaction and not a reversal). Example:

Account 1

Db______Cr

..............100

................20

..............270

................10

----------------

..............400 <-- This is a credit balance (it shall be unsigned).

Reverse transaction No 3 from Account 1 which concerns a loan (just an example)

Account 1_____________Loans

Db.......Cr_____________Db......Cr

........-270 reversal .......... 270

Now, this is the image of the same account

Account 1

Db_______Cr

................100

..................20

................270

..................10

...............-270

------------------

................130 <-- This is the new credit balance (also unsigned).

So.

A credit balance never has a minus in front. A general ledger account usually can have reversals which are negative amounts on the credit (or debit) side, but this is not called 'credit balance'

A balance can sometimes drop below zero, in which case (a) it will have a minus in front and (b) it will not be a 'credit' balance of course, but rather a debit one.

Hope this helps.

PS

dots (....) and underlines (____) only added for visibility/readability purposes they are not contributing to the answer - Thank you.