Final answer:
If a customer's account has a credit balance on the balance sheet date, it should be classified as a liability called 'credit balance' or 'customer credit balance.'
Step-by-step explanation:
If a customer's account has a credit balance on the balance sheet date, it should be classified as a liability called 'credit balance' or 'customer credit balance.' Liabilities represent the amounts the business owes to others. In this case, the credit balance represents funds that the customer has overpaid or deposited in excess of their obligations to the business.
For example, if a customer made a $100 payment but was only required to pay $80, the excess $20 would be classified as a credit balance.
It is important to note that the classification of a credit balance may vary depending on the accounting standards and policies used by the business.