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CMA Foundation · Fundamentals of Financial and Cost Accounting · Journal and Ledger

When a ledger account is balanced at the end of a period, the total of the debit side is Rs 74,500 and the total of the credit side is Rs 61,200. What is the balancing figure and how is it carried down?

The balance is Rs 13,300, the excess of debits over credits. It is inserted on the credit side as 'By Balance c/d' so both sides total Rs 74,500, and brought down on the debit side as the opening balance of the next period.

  1. ARs 13,300 written on the credit side as 'By Balance c/d' and brought down on the debit sideCorrect
  2. BRs 13,300 written on the debit side as 'To Balance c/d' and brought down on the credit side
  3. CRs 13,300 written on the credit side as 'By Balance c/d' and brought down on the credit side
  4. DRs 135,700 written on the credit side as 'By Balance c/d' and brought down on the debit side

Explanation

Debit total exceeds credit total by 74,500 - 61,200 = 13,300, so the account has a debit balance. The difference is entered on the credit side as 'By Balance c/d' to make both totals equal at 74,500, and it is brought down on the debit side as the opening balance. Writing it on the debit side would be wrong because it would widen the gap instead of closing it.

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