Balancing an Account

Balance is the difference between the total debits and the total credits of an account. When posting is done, many accounts may have entries on their debit side as well as credit side. The net result of such debits and credits in an account is the balance. Balancing means the writing of the difference between the amount columns of the two sides in the lighter (smaller total) side, so that the grand totals of the two sides become equal. 5.4.1 Significance of balancing There are three possibilities while balancing an account during a given period. It may be a debit balance or a credit balance or a nil balance depending upon the debit total and the credit total. i. debit Balance : The excess of debit total over the credit total is called the debit balance. When there is only debit entries in an account, the amount
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itself is the balance of that account, i.e., the debit balance. It is first recorded on the credit side, above the total. Then it is entered on the debit side, below the total, as the first item for the next period. Cash Account Dr. Cr.
Date Particulars J.F
Amount Rs.
Date Particulars J.F
Amount Rs.
2003 Mar 2 12
To Sales A/c To Kumar’s A/c
15,000 4,000
2003 Mar 15 28 31
By Purchase A/c By Salary A/c By Balance c/d
8,000 2,500 8,500 19,000 19,000
Apr 1 To Balance b/d

8,500
ii. Credit Balance : The excess of credit total over the debit total is called the credit balance. When there is only credit entries in an account, the amount itself is the balance of that account i.e., the credit balance. It is first written in the debit side, as the last item, above the total. Then it is recorded on the credit side, below the total, as the first item for the next period. Capital Account Dr. Cr.
Date Particulars J.F
Amount Rs.
Date Particulars J.F
Amount Rs.
2004 Mar 31 To Balance c/d 50,000
2003 Apr 1 By Cash 50,000
50,000 50,000 2004 Apr 1 By Balance b/d 50,000 iii. Nil Balance : When the total of debits and credits are equal, it is closed by merely writing the total on both the sides. It indicates the equality of benefits received and given by that account.
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Shankar Account
Dr. Cr.
Date Particulars J.F
Amount Rs.
Date Particulars J.F
Amount Rs.
2003 Mar 20 To Sales A/c 6,000
2003 Mar 25 By Cash 6,000
6,000 6,000 5.4.2 Balancing of different accounts Balancing is done periodically, i.e., weekly, monthly, quarterly, halfyearly or yearly, depending on the requirements of the business. i. Personal Accounts : These accounts are generally balanced regularly to know the amounts due to the persons )creditors( or due from the persons )debtors(. ii. Real Accounts : These accounts are generally balanced at the end of the financial year, when final accounts are being prepared. However, cash account is frequently balanced to know the cash on hand. A debit balance in an asset account indicated the value of the asset owned by the business. Assets accounts always show debit balances. iii. Nominal Accounts : These accounts are in fact, not to be balanced as they are to be closed by transfer to final accounts. A debit balance in a nominal account indicates that it is an expense or loss. A credit balance in a nominal account indicates that it is an income or gain. All such balances in personal and real accounts are shown in the Balance Sheet and the balances in nominal accounts are taken to the Profit and Loss Account. 5.4.3 Procedure for Balancing While balancing an account, the following steps are involved: Step 1 → Total the amount column of the debit side and the credit side separately and then ascertain the difference of both the columns. Step 2 → If the debit side total exceeds the credit side total, put such difference on the amount column of the credit side, write the date on which balancing is being done in the date column and the words “By Balance c/d” (c/d means carried down) in the particulars column. OR
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If the credit side total exceeds the debit side total, put such difference on the amount column of the debit side, write the date on which balancing is being done in the date column and the words “To Balance c/d” in the particulars column. Step 3 → Total again both the amount columns, put the total on both the sides
and draw a line above and a line below the totals. Step 4 → Enter the date of the beginning of the next period in the date column and bring down the debit balance on the debit side along with the words “To Balance b/d” (b/d means brought down) in the particulars column and the credit balance on the credit side along with the words “By balance b/d” in the particulars column. Note: In the place of c/d and b/d, the words c/f or c/o (carried forward or carried over) and b/f or b/o (brought forward or brought over) may also be used. When the balance is carried down in the same page, the words c/d and b/d are used, while balance is carried over to the next page, the term c/o and b/o are used. When balance is carried forward to some other page either in same book or some other book, the abbreviations c/f (carried forward) and b/f (brought forward) are used. Illustration 5 : Balance the following Ledger Account as on 31st March 2003. Siva’s Account Dr. Cr.
Date Particulars J.F
Amount Rs.
Date Particulars J.F
Amount Rs.
2003 Mar 5 21
To Sales A/c To Sales A/c
1,50,000 10,000
2003 Mar. 8 12 20
By Sales Returns A/c By Cash A/c By Bank A/c
10,000 25,000 50,000
Explanation : The steps involved in balancing Siva’s Account. Step 1 → Total the amount column of the debit side Rs. 1,60,000 Total the amount column of the credit side Rs. 85,000 Balance / Difference Rs. 75,000
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Since the total of debit amount column exceeds the total of credit amount column, the difference is Debit balance. Step 2 → Enter the date of balancing, which is normally the last date of the accounting period (i.e., 31st March 2003) in the date column, “By Balance c/d” in the particulars column, and the difference in the amount column on the credit side. Step 3 → Total both the amount columns and draw a line above and a line below the totals. Step 4 → Enter the date of the beginning of the next period in the date column (i.e., 1st April 2003) , ‘To Balance b/d’ in the particulars column and enter the balance amount in the amount column on the debit side. After taking into consideration of the above steps, Siva’s Account will appear as follows: Siva’s Account Dr. Cr.
Date Particulars J.F
Amount Rs.
Date Particulars J.F
Amount Rs.
2003 Mar 5 21
To Sales A/c To Sales A/c
1,50,000 10,000
2003 Mar 8
12 20 31
By Sales Return A/c
By Cash A/c By Bank A/c By Balance c/d
10,000
25,000 50,000 75,000
1,60,000 1,60,000
2003 April 1 To Balance b/d 75,000
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Illustration 6 : Balance the ledger accounts for Illustration 2. Solution: Cash Account Dr. Cr.
Date Particulars J.F
Amount Rs.
Date Particulars J.F
Amount Rs.
2004 Mar 5 7
To Sales A/c To Robert A/c
50,000 6,000
2004 Mar 1 9 20 31
By Purchases A/c By Gopi A/c By Furniture A/c By Balance c/d
25,000 5,000 7,000 19,000
56,000 56,000 April 1 To Balance b/d 19,000
Purchases Account
Dr. Cr.
Date Particulars J.F
Amount Rs.
Date Particulars J.F
Amount Rs.
2004 Mar 1 3
To Cash A/c To Gopi A/c
25,000 19,000
2004 Mar 31
By Balance c/d 44,000
44,000 44,000
April 1
To Balance b/d
44,000
Sales Account
Dr. Cr. Date Particulars J.F Amount Rs. Date Particulars J.F Amount Rs.
2004 Mar 31 To Balance c/d 58,000
2004 Mar 2 5
By Cash A/c By Robert A/c
50,000 8,000
58,000 58,000 April 1 By Balance b/d 58,000
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Furniture Account
Dr. Cr.
Date Particulars J.F
Amount Rs.
Date Particulars J.F
Amount Rs.
2004 Mar 20 To Cash A/c 7,000
2004 Mar 31 By Balance c/d 7,000 7,000 7,000 Apr 1 To Balance b/d 7,000
gopi Account
Dr. Cr.
Date Particulars J.F
Amount Rs.
Date Particulars J.F
Amount Rs.
2004 Mar 19 31
To Cash A/c To Balance c/d
5,000 14,000
2004 Mar 3 By Purchases A/c 19,000
19,000 19,000 April 1 By Balance b/d 14,000 robert Account
Dr. Cr.
Date Particulars J.F
Amount Rs.
Date Particulars J.F
Amount Rs.
2004 Mar 5 To Sales A/c 8,000
2004 Mar 7 31
By Cash A/c By Balance c/d
6,000 2,000
8,000 8,000

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