Hi,
Is anyone here familiar with financial accounting and can tell me the correct English business term for balance accounts that appear in the balance sheet on the active side if their account balance is positive or on the passive side if their account balance is negative, like bank account? The German word is “Wechselkonto” which would literally be “switch account” or “switching account”.
Thank you!
Martin
Bank accounts are classified as assets on the balance sheet is usually a positive balance. If its a negative then you are over drawn in the bank accounts.
Assets like equipment will have depreciation calculated which would be a negative amount as it decrease the amount of equipment being used.
Account Recievable are usually positive but there could be allowance for doubtful account which is negative to get Net Account Recievable/
Allowance for Doubtful accounts is a write amount that the company won’t be able get from people that owe you or the company,
Equipment (positive amount) - Accumulated Depreciation (negative amount or contra accounts) = net Equpment balance. this amount should not go below zero
Asset (usually positive amount, something that is owed to you or you own) = Liabilities (something that you owe to someone IE bank loan accounts payable etc) (negative amount) + Owners Equity (shareholders) (negative amount)
A = L + OE must balance to each other
I hope this helps.
Keith
Hi Keith,
Thank you for your detailed answer.
It’s true that a bank account with a negative balance is over drawn. In Germany most companies have the option to use overdraft on their bank acconts. So it’s a totally valid situation at fiscal year ending to have poitive or negative balance on bank account. If it’s positive it goes to the active/assets side of the balance sheet, if it’s negative it goes to the passive/liabilities side of the balance sheet. That’s exactly why it is calssified as “Wechselkonto”.
Maybe there is no English translation because British acconting rules are different?
Kind regards,
Martin
the negative amount would definitely be on the liability side of the balance sheet
But there is no English word for accounts that could go to assets or liabilities, depending on their balance?
Maybe a Clearing/Suspense Account is a temporary holding account until its reconciled to the proper account.
I believe there would be financial note at year end reference the negative amount on the Liability side.
OK, sounds good. Thank you!