This article is relevant if you are a NetSuite user writing financial statements.
Within the NetSuite secured usergroup community, a number of people have asked questions about how the financial report writer works in relationship to number signs and budgets. NetSuite shared that there are a number of international concerns that lead them to the particular design philosophy. The challenge is that the design produced rules that are not obvious. This article will help illuminate some of the mystery.
Is a Debit Positive and a Credit Negative?
When it comes to working with the NetSuite product, I recommend that you always check your assumptions when you attack any puzzle. And nothing is further from the truth when you work with NetSuite’s financial statement writer. I like the tool — but if you aren’t prepared, you may put yourself in knots. This article will help straighten out some of the mystery in the way positive and negative balances are represented in financial statements.
First, we need to get some things straight. When it comes to working with a trial balance, the following is true:
- Debits are positive
- Credits are negative
- The sum of all these accounts is zero (unless something is broken)
Account Type Polarity
- Assets: Debit (positive balances)
- Liabilities: Credit (negative balances)
- Equity: Credit (negative balances)
- Income: Credit (negative balances)
- Expenses: Debit (positive balances)
Asset Types
- Bank: Debits are positive
- Accounts Receivable: Debits are negative
- Fixed Assets: Debits are negative
- Other Current Asset: Debits are negative
- Fixed Asset: Debits are negative
- Other Asset: Debits are negative
- All Liability Types: Credits are positive
- All Equity Types: Credits are positive
- All Income Types: Credits are positive
- All Expense Types: Debits are negative
- Typical account credits are positive
- Typical account debits are negative except for the bank types as they are positive
Next Challenge: Budget versus Actual
Make your Financial Statement Balances Positive
Reverse Sign only works on Actual Balances
In Summary
See Related Articles
Marty Zigman
Holding all three official certifications, Marty is regarded as the top NetSuite expert and leads a team of senior professionals at Prolecto Resources, Inc. He is a former Deloitte & Touche CPA and has held CTO roles. For over 30 years, Marty has produced leadership in ERP, CRM and eCommerce business systems. Contact Marty to set up a conversation.
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Is there a way to produce a Cash basis balance sheet or trial balance in Netsuite?
The Help topic “Setting Up Cash Basis Reporting” would not lead me to believe you can run those reports on a cash basis.
This is ridiculous. It is no doubt a result of a coder not understanding the basic rules of accounting, that the reason the bank calls an increase to your bank account a credit is because your bank account is a liability to them. How can debit balances on some assets be treated as positive numbers and debit balances on other accounts be treated as negative numbers. Surely they will fix this.
Hi Bob,
I can confirm that NetSuite’s underlying database is sound. See my article here. This article is just helping those who use the financial statement writer understand how the account types affect the report writer.
Marty
Can you help me understand how I can run General Ledger reports with a Base Currency Column that correctly reflects the debits and credits. E.g. if I run the General ledger that includes a Cheque transaction that Credits Bank and Debits Creditors the Base Currency Amount will show both sides of this transaction as Credits. It also means I cannot rely on the General Ledger Balance Column to be accurate.
This is a good question. Since that isn’t really a Financial Report, in my mind, I don’t think these rules apply. I generally revert to Saved Searches for matters as the model is always consistent.
Marty
Do you know what happens to negative amounts on Netsuite expense reports? Is there a way of ensuring the balance owed is automatically posted to accounts payable? At the moment I have to process a journal to debit a/p and credit the individual account. As you can imagine the margin for error is huge.
Hello Patrisha,
This question is effectively not related to this topic. I don’t have a grounded assessment of negatives in the expense reports. But I imagine that I could get in front of it with a) a saved search detection routine and b) some helper script.
Marty