Fundamentals of Financial and Cost Accounting · Accounting Cycle

Ledger Posting and Balancing of Accounts Explained

Updated 10 October 2026 · Fact-checked

Ledger posting means copying each journal or subsidiary book entry into its account in the ledger, debit amount on the debit side and credit amount on the credit side. Balancing means totalling both sides and finding the difference, which is carried down as the closing balance. You then bring it down on the opposite side.

Understand Ledger Posting and Balancing of Accounts

The journal is the book of first entry. It records transactions in date order. The ledger is the book of final entry. It groups all transactions of one account, such as Cash, Rent or Ramesh, in one place. That is why the journal answers "what happened on which day" and the ledger answers "where do we stand on this account".

Posting is the act of moving entries from the journal (or from subsidiary books like the purchases book and sales book) into ledger accounts. Each journal entry has a debit and a credit. You post the debit amount to the debit side of the debited account. You post the credit amount to the credit side of the credited account. Every entry therefore appears twice in the ledger, once on each side.

In each ledger account you write the name of the other account in the particulars column, preceded by "To" on the debit side and "By" on the credit side. If Cash is debited and Sales is credited, the Cash account shows "To Sales" on its debit side and the Sales account shows "By Cash" on its credit side. The particulars always name the opposite account.

Balancing is done at the end of a period. You total the debit side and the credit side. The difference is the balance. If debit total is higher, the account has a debit balance. If credit total is higher, it has a credit balance. You write the balancing figure on the smaller side as "By Balance c/d" or "To Balance c/d", so both sides total the same. Then you bring the balance down (b/d) on the opposite side, on the first day of the next period.

This balancing with c/d and b/d applies to real and personal accounts, because their balances are carried forward to the next period. Nominal accounts such as Sales, Purchases, Rent and Salaries are not carried forward. They are closed by transferring their totals to the Trading account or the Profit and Loss account at the end of the year.

Asset and expense accounts normally show debit balances. Liability, capital and income accounts normally show credit balances. Personal accounts of debtors show debit balances and of creditors show credit balances. These balances later feed the trial balance.

Key formulas to remember

Posting rule: Debit amount → debit side of the debited account; Credit amount → credit side of the credited account; Particulars column names the other account in the entry.
Balance of an account: Balance = Total of higher side − Total of lower side; The balance is written on the smaller side as c/d so that both sides total equally.
Debit balance: Total debits > Total credits; Typical for assets, expenses, losses and debtors.
Credit balance: Total credits > Total debits; Typical for liabilities, capital, income and creditors.
Bring down rule: Balance c/d on one side = Balance b/d on the opposite side; A debit balance is carried down on the credit side and brought down on the debit side, and vice versa.
Closing cash or bank: Closing balance = Opening balance + Receipts − Payments; Useful for quick checks on Cash account.

How to solve Ledger Posting and Balancing of Accounts questions

Use this order for any posting and balancing question, whether you are given journal entries or raw transactions.

1Identify the two accounts in each entry and mark which is debited and which is credited.
2Open a ledger account for each account name that appears. Keep the debit side on the left and the credit side on the right.
3Post the debit: in the debited account, on its debit side, write the date, "To" plus the credited account name, and the amount.
4Post the credit: in the credited account, on its credit side, write the date, "By" plus the debited account name, and the amount.
5Total the debit side and the credit side of each account separately in rough work.
6Find the difference. Write it on the smaller side as "Balance c/d" so both totals match.
7Write the totals on the same line on both sides, then bring down the balance on the opposite side as "Balance b/d".
8Check that total debits of all entries equal total credits of all entries before moving to the trial balance.

Quickest way: Rough balance without drawing full accounts

When to use it: Use it when the MCQ asks only for the closing balance of one account or its nature (debit or credit).

List only the amounts that affect the asked account. Ignore all other accounts.
Add all debit items and all credit items separately.
Subtract the smaller total from the larger total.
Decide the nature: larger debit side means debit balance, larger credit side means credit balance.
Match this figure and nature to the four options and cross out any with a wrong nature first.

Common mistakes in Ledger Posting and Balancing of Accounts

Choosing the side from the words To/By instead of from debit/credit
Students see "To" and "By" in the particulars column and treat them as the rule for which side to post on.
Fix: The side is decided by debit or credit. "To" is written on the debit side and "By" on the credit side, before the name of the opposite account.
Writing the wrong account name in the particulars column
Students write the account's own name instead of the other account in the entry.
Fix: In each account, always name the opposite account of that entry.
Putting the balance c/d on the larger side
Students think the balance must be added to the bigger side.
Fix: Write the balancing figure on the smaller side. Then both sides total the same.
Bringing down the balance on the same side as c/d
Students forget that b/d appears in the next period on the opposite side.
Fix: If c/d is on the credit side, b/d is on the debit side, and the other way round.
Treating a debit balance of a creditor or a credit balance of a debtor as normal
Students memorise nature by account type without checking the totals.
Fix: Let the totals decide. A creditor can show a debit balance if payments exceed credit purchases, which signals an advance or overpayment.
Balancing nominal accounts like Rent or Sales the same way as personal accounts
Students do not know that nominal accounts are transferred to the Trading or Profit and Loss account, not carried forward.
Fix: Nominal accounts (Rent, Sales) are not carried forward with a balance c/d. At year end their totals are transferred to the Trading or Profit and Loss account, while real and personal accounts are balanced and carried forward.

Worked examples

Example 1

Ravi Traders had these transactions in April: 1 April, Started business with cash ₹1,00,000. 5 April, Purchased goods for cash ₹30,000. 10 April, Sold goods for cash ₹45,000. 15 April, Paid rent ₹5,000. Post to the Cash account and find its closing balance.

Show the solution

Journal entries: Cash Dr ₹1,00,000 to Capital; Purchases Dr ₹30,000 to Cash; Cash Dr ₹45,000 to Sales; Rent Dr ₹5,000 to Cash.
Debit side of Cash account: To Capital ₹1,00,000 and To Sales ₹45,000. Total = ₹1,45,000.
Credit side of Cash account: By Purchases ₹30,000 and By Rent ₹5,000. Total = ₹35,000.
Balance = ₹1,45,000 − ₹35,000 = ₹1,10,000.
Write "By Balance c/d ₹1,10,000" on the credit side so both sides total ₹1,45,000.
Bring down "To Balance b/d ₹1,10,000" on the debit side.

Answer: Closing cash balance is ₹1,10,000 (debit balance).

Example 2

The Sharma account in the ledger of Kapoor Stores shows: Opening debit balance ₹20,000; goods sold to Sharma on credit ₹50,000; cash received from Sharma ₹30,000; goods returned by Sharma ₹5,000. Find the closing balance and its nature.

Show the solution

Debit side items: To Balance b/d ₹20,000 and To Sales ₹50,000. Total = ₹70,000.
Credit side items: By Cash ₹30,000 and By Sales Returns ₹5,000. Total = ₹35,000.
Debit side is larger, so the account has a debit balance.
Balance = ₹70,000 − ₹35,000 = ₹35,000.
Write "By Balance c/d ₹35,000" on the credit side so both sides total ₹70,000.
Bring down "To Balance b/d ₹35,000" on the debit side.

Answer: Closing balance is ₹35,000 debit, meaning Sharma owes Kapoor Stores ₹35,000.

Exam tips

For MCQs, decide the nature (debit or credit) first. It often removes two options at once.
Remember the ledger is the book of final entry and the journal is the book of original entry. Questions on this difference are common and easy.
When an MCQ gives a list of transactions for one account, add debits and credits separately instead of netting item by item.
Know which accounts are carried forward (real and personal) and which are closed at year end (nominal).
Do not spend time drawing full T-accounts. A quick two-column list in the margin is enough for 2 marks.

Practice questions from Accounting Cycle

Ledger Posting and Balancing of Accounts in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Ledger Posting and Balancing of Accounts: frequently asked questions

What is the difference between journal and ledger?

The journal records transactions in date order and is the book of original entry. The ledger groups the same transactions account-wise and is the book of final entry. Entries are first made in the journal and then posted to the ledger.

How do I balance a ledger account?

Total both sides, find the difference, and write it on the smaller side as balance c/d so that both totals are equal. Then bring it down on the opposite side as balance b/d. The side with the larger total decides whether the balance is debit or credit.

Do I post from the journal or from subsidiary books?

Both. Ordinary journal entries are posted entry by entry. Subsidiary books such as the sales book and purchases book are usually posted using their periodic totals for the main account and individual amounts for personal accounts.

Why does the particulars column use To and By?

It is a traditional style of writing the opposite account. "To" is used on the debit side and "By" on the credit side. Both show where the other half of the entry sits.