Balancing accounts

At the end of the period, each ledger account is balanced, so you can see what it stands at.

• Add up both sides.
• Write the difference on the shorter side as "Balance c/d" (carried down), so that both sides now total the same.
• Write both totals on the same line.
• Bring the balance down on the other side, below the totals, as "Balance b/d" (brought down). This is the opening figure for the next period.

If the debit side was larger, the account has a debit balance. Assets (cash, furniture, debtors) and drawings usually have debit balances. If the credit side was larger, it has a credit balance. Liabilities (creditors, loans) and capital usually have credit balances.

Example: a furniture account with debits of ₹6,000 and ₹8,000 and nothing on the credit side. Total 14,000; write "By Balance c/d 14,000" on the credit side; then "To Balance b/d 14,000" on the debit side. That is a debit balance of ₹14,000.

Not every account is balanced and carried forward. Expense and revenue accounts (rent, wages, sales, commission) are closed at the end of the year by transferring them to the trading and profit and loss account.

Sometimes an account is exactly settled. In the book's full example, Ramneek's account has ₹4,140 on one side (1,740 + 2,400) and ₹4,140 on the other (440 + 3,700), so there is no balance. Daman still owes ₹3,600. This is the last step after all the books: cash book, purchases, sales and return books, journal proper, then posting to the ledger and balancing.