Balancing

Question 1

Balancing accounts

Answer 1

Balancing accounts

.Identify the total amount remaining on each account
after all transactions for the accounting period have
been entered into the ledger accounts.

.When balancing - DON’T balance into new financial year.

STEPS 1) Add up the DEBIT SIDE of the ledger account. 2) Add up the CREDIT SIDE of the ledger account.  3) Use the higher of the two values as the total for both 
the DEBIT and CREDIT SIDE. 4) This means that one of the sides needs a balancing 
figure inserted to ensure that it adds up to the TOTAL 
entered, this is known as the balance carried down = 
(balance C/D). 5) The balance carried down must then be brought down 
 = (balance B/D) to the opposite side of the ledger 
 account (underneath the totals) to reflect the opening 
 position for the following accounting period.

Question 2

Balancing off a ledger account in a MANUAL bookkeeping system

Answer 2

Balancing off a ledger account in a MANUAL bookkeeping system

STEPS
1) The DEBIT SIDE adds up to the higher amount so, is
used for both totals.
2) Balancing figure entered as balance carried down on
the last day of the month.
3) Balance is brought down on the opposite side to
reflect its true position on the first day of the following
month. This is an ASSET which is a DEBIT BALANCE.

Question 3

Balances brought down (b/d)

Answer 3

Balances brought down (b/d)

.Only when balances are brought down do they show the
true position based on the principles of double entry
bookkeeping and ledger accounting.

Question 4

Balancing ledger account examples

Answer 4

Balancing ledger account examples

.If only one side has entries then the total for the one side is to be put for the total on both the debit and credit side. Depending on which side the entries are on the side with no entries needs the b/c as the total. On the 1st of the next month, the b/d will be the total from just the one side.

.LOOK AT THE BOOKKEEPING FOLDER FOR PICTURE
EXAMPLES

Question 5

Balancing BANK account

Answer 5

Balancing BANK ACCOUNT

.NOT OVERDRAWN = DEBIT SIDE for b/d at the start of
next month because BANK ACCOUNT IS AN ASSET.

.OVERDRAWN = CREDIT SIDE for b/d at start of the next
month.

Question 6

Balancing with INVOICES on account but NO PAYMENTS

Answer 6

Balancing with INVOICES on account but NO PAYMENTS

.There will be nothing to balance so, balance c/d is the total from the side used and the balance b/d will also be the same.

Question 7

Balancing CASH account example

Answer 7

Balancing CASH account example

.The bookkeeper has just balanced the cash account and the b/d balance states £165 on the CREDIT SIDE. What does this indicate?

.ANSWER = The bookkeeper has made a mistake.