Bank: debit or credit?
Bank increases on the debit side and decreases on the credit side: its normal balance is a debit.
Assets are resources the business controls. They increase with a debit.
Name in each convention
Account names and codes follow each convention; an account that does not exist in a convention is not offered there.
| Convention | Account |
|---|---|
| United States (US textbooks) | — |
| Spain (PGC 2007) | 572 Bancos e instituciones de crédito c/c vista, euros |
| France (PCG 2025) | 512 Banques |
| Germany (generic accounts) | Bank |
Practice entries that use this account
- Owner invests cash to start the business
- Receiving a bank loan
- Repaying the principal of a bank loan
- Paying a loan installment: principal plus interest
- Owner withdraws cash for personal use
- Issuing shares at nominal value for cash
- Buying merchandise, paying part now and the rest on credit
- Paying a supplier’s invoice in full
- Paying a supplier within the discount period
- Paying a carrier for delivering purchased goods
- Buying merchandise with a cash discount on the invoice
- Buying merchandise under the periodic inventory system
- Paying part of a supplier’s invoice by bank transfer
- Customer pays within the discount period
- Service paid for on completion
- Receiving a customer deposit before the service
- Sale paid partly at once, partly on credit
- Recovering a receivable written off last year
- Receiving rent for a van rented out
- Buying a machine paid at once by bank transfer, with VAT
- Buying a machine with a payment on delivery and a bill of exchange for the rest
- Buying a machine with transport and installation, with VAT
- Buying a machine, part paid and part on credit, with VAT
- Buying a plot of land
- Buying a building with a mortgage loan and a bank transfer
- Buying a delivery van with a bank loan, with VAT
- Selling a machine at a loss
- Trading in an old delivery van for a new one
- Paying for a machine repair, with VAT
- Selling a machine at a gain, with VAT
- Paying the monthly rent of the business premises
- Paying six months’ rent in advance
- Paying the electricity bill
- Paying the month’s salaries
- Paying salaries accrued at year end
- Monthly payroll with withholding and employer contributions
- Paying for advertising, with VAT
- Paying the annual insurance premium
- Bank charges on a transfer to a supplier
- Paying quarterly interest on a bank loan
- Reimbursing the owner for a business trip
- Paying corporate income tax owed
- Correcting an insurance payment recorded at the wrong amount
- Settling VAT for the period
- Depositing the cash takings in the bank
- Withdrawing cash from the bank, with a fee
- Setting up a petty cash fund
- Replenishing petty cash after several small expenses
- Customer check returned unpaid
- Bank collects a bill of exchange for the company
- Bank fee and interest found in a bank reconciliation
- Transferring money between two of the company’s bank accounts
- Customer pays two invoices by one bank transfer, less a bank fee
- Collecting a note with interest
- Paying a note with interest at maturity
- Receiving a bank loan net of an arrangement fee
- Paying a loan installment: splitting interest and principal
- Repaying a bank overdraft
- Paying freight-out on goods sold
- Purchase discount taken, reducing inventory
- Issuing shares above nominal value
- Paying a dividend decided earlier
- Buying back own shares
- Deciding and paying a dividend the same day
- Buying on credit, returning part, paying the rest
- Credit sale, return, then payment within the discount period
- A machine bought, depreciated for a year, then sold