Today I learned about the passive sign convention in electric circuits. It is also known as “associated references”. When current is flowing into the positive terminal of a circuit element then the element is absorbing power. When current is flowing into the negative terminal of a circuit element then the element is providing power. P = VI and when P is positive the element is receiving power and when P is negative the element is providing power. In a complete circuit the sum of power is zero, the sources and loads are evenly balanced.