What does a debit balance and a credit balance mean in the cash book?

Beginner

Answer

A debit balance in the cash book means the business has cash/money at the bank (an asset). A credit balance on the bank column means the bank account is overdrawn (a liability—the business owes the bank). The petty cash and cash columns normally carry debit balances.

Real-world example A credit bank balance in the cash book signals the business is overdrawn and owes the bank.

Common follow-ups: What does an overdraft look like in the cash book? | Which balance is an asset?

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