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When are expenses credited?

Typically, general ledger expense accounts are debited and will carry a debit balance. However, there are times when an expense account will be credited. The following lists some instances when an expense will be credited:

  • A correcting entry to reclassify an amount from an incorrect account to a correct account
  • End-of-year closing entries
  • Reversing an entry for a previously accrued adjusting entry involving an expense

    On a side note, tt is important to remember that often times rather than reversing a previous entry, a "contra" account is used. For example, when someone returns an item, you should not directly decrease your sales account, but should use a contra-sales account to keep track of how many returns you've had. Netting the two will still give you the same sales number.