Bank accounts

trians
trians Registered Posts: 10 Regular contributor ⭐ ? ⭐
Does a debit balance (£1000) on the bank account simply mean that there is £1000 actually in the account?

How would an overdraft be termed?

Comments

  • Gem7321
    Gem7321 MAAT, AAT Licensed Accountant Posts: 1,438
    Yes a debit balance means there is £1,000 in the account, an overdrawn bank account would have a credit balance of £1,000
  • A bank account with money in it is an asset so it shows as a debit. Try to remember the below acronym as it helps greatly.

    Debit
    Expenses
    Assets
    Drawings

    Credit
    Liabilities
    Income
    Capital
  • marknotgeorge
    marknotgeorge Registered Posts: 158 ? ? ?
    Part of the problem may be that to non-accounting people, being in credit means they've got money in the bank. That's because bank statements are looking at it from the bank's perspective. The bank effectively owes you money, so to them you are a creditor.
    Knug21
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