Skip to main content

ACCAPEDIA

 
 
Kaplan Wiki > ACCAPEDIA > Wiki Pages > Balancing and closing a ledger account

Balancing and closing a ledger account


 
FavoriteFavorite
Click on the link to subscribe to the page and add it to My Subscriptions view.
Subscribe to e-mail alert notifying.
View feeds on this page.
|
DiscussionsDiscussions
|
Print
|
Export to Word
Export to PDF
 
History
|
Incoming Links
Contents [Hide]

Balancing and Closing a Ledger Account

Balancing off a ledger account

Once the transactions for a period have been recorded, it will be necessary to find the balance on the ledger account:

(1)Total both sides of the T account and find the larger total.

(2)Put the larger total in the total box on the debit and credit side.

(3)Insert a balancing figure to the side of the T account which does not currently add up to the amount in the total box. Call this balancing figure ‘balance c/f’ (carried forward) or ‘balance c/d’ (carried down).

(4)Carry the balance down diagonally and call it ‘balance b/f’ (brought forward) or ‘balance b/d’ (brought down).

Illustration 

A company has the following ledger account at the period end:

Cash

$

$

Capital

10,000

Purchases

200

Sales

250

Rent

150

 

 

Electricity

75

It would be balanced off as follows:

Cash

$

 

$

Capital

10,000

Purchases

200

Sales

250

Rent

150

 

Electricity

75

 

Balance c/f

9,825

––––––

 

––––––

10,250

 

10,250

––––––

 

––––––

Balance b/f

9,825

 

Closing a ledger account

At the year end, the ledger accounts must be closed off in preparation for the recording of transactions in the next accounting period.Statement of financial position

ledger accounts

 

 

Assets/liabilities at the end of a period = assets/liabilities at start of the next period, e.g. the cash at bank at the end of one day will be the cash at bank at the start of the following day. Balancing the account will result in:

  • a balance c/f (being the asset/liability at the end of the accounting period)
  • a balance b/f (being the asset/liability at the start of the next accounting period). These are left as they are as an opening figure that next period's transactions and events can follow on from. Income statement

 

ledger accounts

 

At the end of a period any amounts that relate to that period are transferred out of the income and expenditure accounts into another ledger account called the income statement. This is done by closing the account.

There should be no balances carried forward to the next accounting period for income statement items.

Created at 10/23/2012 3:02 PM  by System Account  (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London
Last modified at 3/10/2014 3:08 PM  by System Account  (GMT) Greenwich Mean Time : Dublin, Edinburgh, Lisbon, London

Rating :

Ratings & Comments  (Click the stars to rate the page)

Tags:

Recent Discussions

There are no items to show in this view.
ACCAPEDIA - Balancing and closing a ledger account