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USTaxAdvising
USTaxAdvising, Accountant
Category: Finance
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Why would the balance on a ledger go up when the debits are

Customer Question

why would the balance on a ledger go up when the debits are added in? would that mean that the original balance was negative?
Submitted: 1 year ago.
Category: Finance
Expert:  USTaxAdvising replied 1 year ago.

Hello,

The balance of a general ledger account would go up when debits are added when the account is either an asset account or an expense account. Asset accounts on the balance sheet increase when debited and decrease when credited. The same applies to an income statement expense account.

When a balance sheet liability account is credited it goes up and decreases when debited, the same applies to income statement revenue accounts.

Please let me know if you have any further questions and I will get back to you as soon as I can.

Best regards,

Customer: replied 1 year ago.
An asset in this case would be what? I'm thinking that the balance is possibly a loan. Would that be an asset? Or perhaps the balance is from art of the payment for the company and in that case would it still be considered an asset?
Expert:  USTaxAdvising replied 1 year ago.

An asset would be something like a cash or equipment account. It could also be an accounts receivable account or an investment account or a loan account where the company has loaned monies to some other entity/person.

If the company has a loan from another entity/person then the loan account would be a liability account and decrease when debited/paid down.

Does that help?

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