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

While balancing a ledger account at the end of the 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 correct treatment?

The account has a debit balance of Rs 13,300. It is shown as 'By Balance c/d' on the credit side to equalise the totals at Rs 74,500, and then carried down as 'To Balance b/d' on the debit side at the start of the next period.

  1. AWrite 'By Balance c/d' Rs 13,300 on the credit side and bring it down as 'To Balance b/d' on the debit sideCorrect
  2. BWrite 'To Balance c/d' Rs 13,300 on the debit side and bring it down as 'By Balance b/d' on the credit side
  3. CWrite 'By Balance c/d' Rs 13,300 on the debit side and bring it down on the credit side
  4. DWrite 'To Balance c/d' Rs 135,700 on the debit side

Explanation

Debit total 74,500 exceeds credit total 61,200 by 13,300. The shortfall is added to the credit side as 'By Balance c/d' so both totals equal 74,500, and the opening balance for the next period is 'To Balance b/d' on the debit side. Option 2 reverses the sides, which would be right only if credits were larger.

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