The office equipment normal balance, also called the balance of the month or the cash flow statement, is the most important accounting concept that you need to understand. It can be confusing, but if you understand it, your bookkeeping process will be smooth sailing.
The best way to understand a normal balance is to see how it is displayed in the accounting system. Usually, the balance in a specific account is displayed on the left side of the screen while the debit and credit amounts are shown on the right. When the right balance is shown, it is a good indication that an entry was made to the appropriate account.
You may also need to understand the normal balance for a specific account if you are going to compare it against another similar type of account. For example, an asset account such as cash or inventory should have a normal debit balance while a liability account such as accounts payable should have a normal credit balance.
Keeping track of a normal balance is also essential for making sure you aren’t sunk with overpayments to suppliers or sloppy data entry. Having a good understanding of the normal balance for a particular account can save you time and money in the long run, as well as provide a benchmark against which to measure future success.
The office equipment normal balance can be difficult to decipher, especially if you don’t have an accountant or tax professional on your team to guide you through the process. For the best results, consider using a chart of accounts to help you visualize the most important accounting elements in your company’s financials.