In accounting, a normal balance is the expected side (debit or credit) where an account increases, representing its typical net balance.

  • Asset, deferred outflows of resources, and expense/expenditure general ledger accounts (GLs) have a normal debit balance.
  • Liability, deferred inflows of resources, and revenue GLs have a normal credit balance.
  • Contra accounts operate in reverse. For example, allowance for uncollectible receivables is a contra asset account so it holds a normal credit balance.

The AFRS Exception Reports – Questionable Balance – Assets and Deferred Outflows of Resources and Questionable Balance – Liabilities and Deferred Inflows of Resources identify AFRS GL accounts with balances opposite of what is expected such as an asset with a credit balance. 

Run both questionable balance reports monthly during the fiscal year, and more frequently at year-end. These exception reports should be run with Group Option B selected to show the questionable balances at the GL subsidiary balance level.

Every balance on this report indicates there is an inverse balance that must be corrected. Perform or review the reconciliation for the GL to determine what is causing the inverse balance and record the appropriate correcting entry.