Fundamentals of Financial and Cost Accounting · Journal and Ledger

Ledger Posting and Balancing of Accounts Explained

Updated 10 October 2026 · Fact-checked

Ledger posting means copying each journal entry into the separate account it affects, debit amount on the debit side and credit amount on the credit side. Balancing means totalling both sides, finding the difference, and showing it as the closing balance carried down, which then becomes the opening balance of the next period.

Understand Ledger Posting and Balancing Accounts

The journal records transactions in date order. It is the first book of entry. But a journal cannot tell you how much you owe a supplier or how much cash you hold. For that you need all transactions of one kind collected in one place. That place is the ledger, and each page or section of it is an account.

Posting is the act of moving entries from the journal to the ledger. Every journal entry has at least one debit and one credit. You post the debit to the debit side of that account and the credit to the credit side of the other account. The amount never changes. Only the side and the account are decided by the entry.

In the ledger, each line carries the name of the other account involved, written as "To" on the debit side and "By" on the credit side. This is called the particulars column. It helps you trace the entry back to the journal. Journal vs ledger in one line: the journal records transactions chronologically, the ledger classifies them account-wise.

Balancing gives the net position of an account. Total both sides. The side with the bigger total shows the balance. Put the difference on the smaller side as "By Balance c/d" or "To Balance c/d" so both sides match. Then write the same figure on the opposite side below the totals as "To Balance b/d" or "By Balance b/d" for the next period.

Personal and real accounts (assets, liabilities, capital) are balanced and the balance is carried forward. Nominal accounts (expenses and incomes) are normally not carried forward. They are closed by transfer to the Trading or Profit and Loss Account at the year end.

Key formulas to remember

Posting rule: Debit side of journal entry → Debit side of the account; Credit side of journal entry → Credit side of the account; The amount stays the same. Only the account name in particulars is the other account of the entry.
Debit balance: Total of debit side > Total of credit side → Balance = Debit total − Credit total (debit balance); Typical for assets, expenses and debtors. Written as By Balance c/d on the credit side.
Credit balance: Total of credit side > Total of debit side → Balance = Credit total − Debit total (credit balance); Typical for liabilities, capital, incomes and creditors. Written as To Balance c/d on the debit side.
Carry down: Closing balance c/d of this period = Opening balance b/d of next period; Balance c/d goes on the smaller side. Balance b/d goes on the opposite (larger) side, below the totals, which is the side where the balance belongs.
Cash account limit: Cash Account (cash in hand) cannot have a credit balance; Cash paid cannot exceed cash available, so a credit balance in the Cash Account (cash in hand) signals an error. This rule does not apply to a Bank Account, which can show a credit balance when there is an overdraft.

How to solve Ledger Posting and Balancing Accounts questions

Use this method for any question that gives journal entries or transactions and asks for a ledger account or its closing balance.

1Read the question and list the accounts you need. Open each account as a T-format with Dr on the left and Cr on the right.
2If transactions are given, first decide the debit and credit accounts for each one.
3Post each entry: put the amount on the debit side of the debited account, naming the credited account as "To". Put it on the credit side of the credited account, naming the debited account as "By".
4Enter opening balances first. A debit opening balance goes on the debit side as "To Balance b/d". A credit opening balance goes on the credit side as "By Balance b/d".
5Total each side in rough. Find which side is larger.
6Insert the difference on the smaller side as Balance c/d, so both totals become equal. Write the total on both sides at the same level.
7Write the Balance b/d on the opposite (larger) side below the totals.
8Check: debit balance accounts should be assets, expenses or debtors. A surprising result means you have posted to the wrong side.

Quickest way: Direct balance without drawing the account

When to use it: Use when the MCQ only asks for the closing balance of one account and not the full format.

Add all debit items, including any opening debit balance, into one number.
Add all credit items, including any opening credit balance, into another.
Subtract the smaller from the larger. The larger side decides whether the balance is debit or credit.
Scan the options. Eliminate any option with the wrong nature, for example a credit balance for a machinery account.
Check that the figure is not one of the totals or an item itself, which are common traps.

Common mistakes in Ledger Posting and Balancing Accounts

Posting an amount on the same side as in the journal for both accounts.
Students copy the side without thinking about the other account.
Fix: Remember each entry has two sides. The debited account takes it on its debit side, the credited account on its credit side.
Writing the wrong particulars, such as the account's own name.
Students write the account they are in instead of the opposite account.
Fix: In particulars always write the other account of the entry. Use "To" on the debit side and "By" on the credit side.
Putting Balance c/d on the larger side.
Students think the balance should sit on the side where it belongs.
Fix: Balance c/d goes on the smaller side to make totals equal. Balance b/d goes on the opposite, larger side, below the totals, which is where the balance belongs.
Treating opening balance of a liability as a debit.
Students assume every opening balance is debit.
Fix: Assets and debtors open with a debit balance. Liabilities, capital and creditors open with a credit balance.
Totals on the two sides not matching at the same line.
Arithmetic slip or leaving gaps and writing totals at different levels.
Fix: Re-add both sides. Write the total on both sides at the same level so the closing is clearly equal.
Carrying forward nominal account balances as b/d.
Students balance every account the same way.
Fix: Expenses and incomes are transferred to the Trading or Profit and Loss Account at year end, not carried forward.

Worked examples

Example 1

Ravi Traders had cash of ₹20,000 on 1 April. On 5 April it sold goods for cash ₹15,000. On 10 April it paid rent ₹4,000 in cash. On 20 April it paid ₹6,000 cash to a supplier, Mehta & Co. What is the closing balance of the Cash Account?

Show the solution

Opening cash is an asset, so debit side: To Balance b/d ₹20,000.
Cash sales: cash comes in, so debit side: To Sales ₹15,000.
Rent paid: cash goes out, so credit side: By Rent ₹4,000.
Payment to Mehta & Co.: credit side: By Mehta & Co. ₹6,000.
Debit total = 20,000 + 15,000 = ₹35,000.
Credit total = 4,000 + 6,000 = ₹10,000.
Balance = 35,000 − 10,000 = ₹25,000, a debit balance. Show it as By Balance c/d ₹25,000 on the credit side, so both totals are ₹35,000.

Answer: Closing cash balance is ₹25,000 (debit), carried down as To Balance b/d ₹25,000.

Example 2

In the books of Sharma Stores, the Account of Gupta (a customer) shows: opening balance owed by Gupta ₹12,000; goods sold to Gupta on credit ₹30,000; Gupta returned goods worth ₹2,000; Gupta paid ₹25,000 by cheque. Prepare Gupta's account and find the closing balance.

Show the solution

Gupta owes money, so he is a debtor. Opening balance is on the debit side: To Balance b/d ₹12,000.
Credit sales: debit Gupta: To Sales ₹30,000.
Sales return: credit Gupta: By Sales Returns ₹2,000.
Cheque received: credit Gupta: By Bank ₹25,000.
Debit total = 12,000 + 30,000 = ₹42,000.
Credit total = 2,000 + 25,000 = ₹27,000.
Difference = 42,000 − 27,000 = ₹15,000. Put By Balance c/d ₹15,000 on the credit side so both sides total ₹42,000.
Write To Balance b/d ₹15,000 on the debit side for the next period.

Answer: Gupta's account closes with a debit balance of ₹15,000, which he still owes Sharma Stores.

Exam tips

Most MCQs ask only the closing balance. Add each side separately and subtract. You rarely need to draw the full account.
First check the nature of the account. Asset and expense accounts give debit balances. A credit answer there can be eliminated.
Watch the opening balance. Missing it is the commonest cause of a wrong option.
Questions may ask which side a balance appears on or what Balance b/d means. Remember b/d is the opening figure of the next period.
For the difference between journal and ledger, remember: journal is the book of original entry in date order, ledger is the book of final entry classified by account.

Practice questions from Journal and Ledger

Ledger Posting and Balancing 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 Accounts: frequently asked questions

What is the difference between journal and ledger?

The journal records transactions in date order as they happen, with a narration. It is the book of original entry. The ledger groups those entries account-wise and is the book of final entry. Posting links the two.

How do I balance a ledger account?

Add both sides and find the larger total. Write the difference on the smaller side as Balance c/d so both totals match. Then show the same amount as Balance b/d on the opposite side below the totals.

Why is Balance c/d written on the smaller side?

It is the figure needed to make the two sides equal. The actual balance belongs to the larger side, so it shows there as Balance b/d for the next period.

Are all accounts balanced in the same way?

The method of totalling and finding the difference is the same. But only personal and real accounts are carried forward. Nominal accounts are closed by transfer to the Trading or Profit and Loss Account.