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Debit Account balances

In order determine whether an account with a debit balance will appear in the assets side of the balance sheet or debit side of either trading or profit and loss account, the criterion is: “If any value remains in the business to represent a debit balance, e.g., plant and machinery or buildings or prepayments, such balances will appear in the asset side of Balance Sheet. In other cases, that is, when value does not remain in the business, it must be a loss (e.g., bad debts) or an expense (e.g., rent, salaries etc.) to be written off by a transfer to the Manufacturing Account or Trading Account or Profit and Loss Account.”

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