Introduction to Ledger Account Balancing in Accounting

Niran Marshall Perera
A free video tutorial from Niran Marshall Perera
Attorney at Law, LL. B graduate (University of London) & Business Commerce graduate ( University of Sri Jayewardenapura)
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Excel for Accounting and Bookkeeping

Be Your Own Accountant By Developing Your Own Accounting Template

02:57:43 of on-demand video • Updated October 2017

  • How to develop a Life Time Accounting Template
  • Basic Accounting Principles
  • Useful Excel Tricks Related to Accounting
English In this topic we will see how to balance ledger accounts. I will show you assets and expenditure accounts separately and capital, liability and revenue accounts separately. So as we saw in our previous slide assets and expenditure normally will have a debit account balance whereas capital, liability and revenue accounts will have a credit account balance. So let's start with assets and expenditure. So as I said we will normally have debit account opening balance. So which is reflected by BBF. That is to say Balance Brought Forward. That is the balance carried down from the last accounting period. So we'll have a figure for that then we will have debit transactions then we'll have credit transactions. Now we'll see how to balance ledger accounts. Before that we have to put that double boarder and the top boarder. Then we have to take the aggregate sum of the side which have the highest value. So if you see in Debit side we have 3,500 whereas credit side is 750. So we will take debit side balance. So then we'll put that balance to the other side as well. From that balance we have to deduct all the items in credit side. So 3,500 minus 750 will be 2,750. And that will be the B/C/D. That is the Balance Carried Down. So that balance carried down will be the opening balance of next accounting period. So we will record that as B/B/F 2,750. So that's how we balance asset and expenditure. In other way debit account balancing format. Now let's move on to capital liability and revenue accounts. So as I said it is likely to have credit opening balance. So BBF in the credit side then there will be transactions in credit side as well as debit side. So let's see how to balance it. Again we have to take the value of the highest side so credit has 2000 whereas debit has only 750. So we will take 2000 and we'll put that figure to the other side as well. Then from that figure we have to deduct 750. So our balance is 1250. So we'll write B/C/D then we have to record the next accounting period opening balance. So B/B/F 1250. So that's how we balance ledger accounts. Let's move on to develop an automated template.