Each type of account in accounting has a 'natural balance' of either a debit or credit
For Example:
Income Statement
Revenue (Cr)
Expense (Dr)
Net Income (Cr / Dr)
Balance Sheet
Asset (Dr)
Liabilities (Cr)
Owners' Equity (Cr)
The positive or negative balance left in the account determines what debit or credit position the account will have.
Therefore:
A positive value in an asset account = the account is in its natural debit position
A negative value in an asset account = the account is in an unnatural credit position
Positive Cash Value = Asset Account is in a Debit Position
Negative Cash Value = Asset Account is in a Credit Position
A positive value in a liability account = the account is in its natural credit position
A negative value in a libility account = the account is in an unnatural debit position
Positive Accounts Payable = Liability Account is in a Credit Position
Negative Accounts Payable = Liability Account is in a Debit Position
Bob gets his company's $100 monthly phone bill
Dr Phone Expense 100
Cr Accounts Payable 100
Bob pays the bill
Dr Accounts Payable 100
Cr Cash Asset 100
Ending Account Balances
Phone Expense = 100______________Expense Account = + Value = Debit Position
Accounts Payable = 100-100 = 0______Liability Account = No Value = Credit Position
Cash Asset = -100________________ Asset Account = - Value = Credit Position
Explanation
Bob added the $100 balance to one account and subtracted it from another. The expense and liability accounts' ending balances were left in their natural positive positions, so their natural debit and credit positions did not change.
The ending cash (asset account) balance was negative and as a result its natural debit position changed to an unnatural credit position
See How To Job Cost
