Reasons for balancing the ledger account To show how the monies been used. How much the business owes a supplier. How much money a customer owes the business.

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Presentation transcript:

Reasons for balancing the ledger account To show how the monies been used. How much the business owes a supplier. How much money a customer owes the business. Balanced accounts are used to produce all final financial reports.

There are 5 steps to balancing an account Step1. Find the higher value of the account Step 2. Having found the higher value, enter the narrative “balance c/d” on the other side of the account. Step 3. Enter the total value onto both side of the account ensuring they are parallel Step 4. Find the difference (the balance) between the two totals, taking the lower value from the higher Step 5. Bring down the revised balance use the narrative “balance b/d”

Balancing the ledger account Name of the account DateDetails£DateDetails£ 21/3Sales /3Sales returns /3Sales /3Bank /3Sales /3 Discount allowed /3Sales455.38

Step 1. Find the higher value of the account Name of the account DateDetails£DateDetails£ 21/3Sales /3Sales returns /3Sales /3Bank /3Sales /3 Discount allowed /3Sales

Step 2.Having found the higher value, enter the narrative “balance c/d” on the other side of the account. Name of the account DateDetails£DateDetails£ 21/3Sales /3Sales returns /3Sales /3Bank /3Sales /3 Discount allowed /3Sales /3Balance c/d

Step 3. Enter the total value onto both side of the account ensuring they are parallel Name of the account DateDetails£DateDetails£ 21/3Sales /3 Sales returns /3Sales /3Bank /3Sales /3 Discount allowed /3Sales /3Balance c/d

Step 4. Find the difference (the balance) between the two totals, taking the lower value from the higher Name of the account DateDetails£DateDetails£ 21/3Sales /3 Sales returns /3Sales /3Bank /3Sales /3 Discount allowed /3Sales /3Balance c/d

Step 5. Bring down the revised balance Name of the account DateDetails£DateDetails£ 21/3Sales /3 Sales returns /3Sales /3Bank /3Sales /3 Discount allowed /3Sales /3Balance c/d /4Balance b/d

Continue entering the next months transactions 27/3Sales /3 Discount allowed /3Sales /3Balance c/d /04Balance b/d /04 Sales returns /04Sales439.70

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