### ZIMSEC O Level Principles of Accounts Notes: Balancing off the accounts

• Thus far we have only looked at how to record various transactions including:
1. Purchases
2. Sales
3. Returns Outwards and Returns Inwards
4. Other transactions such as those found in the General Ledger
• You might have noticed an entry that is listed as “Balance c/d” or “Balance b/d” in some of the examples
• This is known as balancing off the accounts
• It is done either at the end of every month, quarter, year or trading period depending on the business’s policies

#### Balancing off accounts

• Where an account has one entry on each side and Â the amounts are equal simply double underline the entries as shown in the example below
 J Chimuti Account Date Details Amount(\$) Date Details Amount(\$) 1 July Sales 300 5 October Bank 300
• Since the credit and debit side are equal in this case the account is considered balanced off
• If there are multiple transactions on both sides that are of equal amounts:
1. Just add up the totals on both sides and place them in the same row on both sides beneath the amounts
2. Double underline these totals as shown in the example below
 J Chimuti Account Date Details Amount(\$) Date Details Amount(\$) 1 November Bank 700 5 October Purchases 1000 13 December Cash 500 11 November Purchases 450 13 December Discount 200 28 December Cash 50 1450 1450
• Since both sides are equal the account is considered balanced
• If an account only has one entry then on the last day of the month,year or trading period:
1. We insert the balancing figure on the opposite side
2. The details on that side should Balance c/d
3. This is short for Balance carried down
4. On the first day of the next month or period the figure is entered as Balance b/d on the opposite side of the previous entry
• Consider the example shown below:
 Motor Vehicle Account Date Details Amount(\$) Date Details Amount(\$) 2016 5 January Bank 3000 31 December Balance c/d 3000 2017 1 January Balance b/d 3000
• Finally if an account has multiple entries on both side:
1. First find out which side has a larger amount
2. Subtract the total of the smaller side from the total of the larger side
3. Insert the difference with the narration Balance c/d on the smaller side
4. Add the totals of both sides, which should now be equal, and double underline them
5. On the first day of the next period bring down the Balance c/d on the opposite side
• Consider the following illustration:
 Motor Vehicle Account Date Details Amount(\$) Date Details Amount(\$) 2016 5 January Bank 3000 31 December Balance c/d 4200 12 August Cash 1200 4200 4200 2017 1 January Balance b/d 4200
• These techniques are used when balancing off all accounts
• An account that has a debit side amount which is larger is said to have a debit balance
• An account whose credit side amount is larger is said to have a credit balance
• Accounts whose debit and credit side amounts are equal are said to have a zero balance
• At the end of the period these balances are extracted and form the basis of a Trial Balance

We have an example question and solution on balancing off accounts here

To access more topics go to the Principles of Accounts Notes.

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