1. Balancing Ledger Accounts
Mr. Barry
A-level Accounting Year 12

2. The Use of Ledger a/c in completing a Trial Balance
Learning objectives:
To understand how the ledger is divided up
To understand & be able to recall what is in the sales & general ledger
To understand the purpose of balancing accounts for use in the trial balance
Mr. Barry
A-level Accounting Year 12

3. A-level Accounting Year 12
Division of the Ledger
Sales Ledger
Accounts of debtors
Purchases Ledger
Accounts of creditors
Cash Books
Main cash book &
Petty cash book – NOT ON SYLLABUS
General (nominal) Ledger
Nominal accounts – sales a/c, purchases a/c, expenses & income, VAT, profit & loss
Real accounts (fixed assets a/cs & stock
Mr. Barry
A-level Accounting Year 12

4. A-level Accounting Year 12
Business Transaction
Stages in the Accounting Process
Source Documents
Books of Prime Entry
Day books Cash Books Journal
Ledgers
Trial Balance
Final Accounts
Income Statement Balance Sheet Cash Flow Statement
Mr. Barry
A-level Accounting Year 12

5. Purposes of Final Accounts
Profit & Loss Account (Income Statement)
Owners want to judge performance (profit)
Tax purposes
Measure growth
Judge managements ability to control costs and expenses.
Mr. Barry
A-level Accounting Year 12

6. Purposes of Final Accounts
Balance Sheet
Provides a summery and valuation of business’s assets, liabilities and capital
Gives an overall valuation of the business
Helps identify liquidity (WC = CA – CL)
Identifies sources of funds / level of borrowing v level of owner investment v reserves – CAPITAL STRUCTURE
Mr. Barry
A-level Accounting Year 12

7. A-level Accounting Year 12
Understanding the difference between Income Statement items and Balance Sheet items
Income Statement items include:
Any items categorised as Revenue and Expenses
Sales
Purchases
Carriage in/ carriage outwards
Expenses
Mr. Barry
A-level Accounting Year 12

8. A-Level Accounting Year 12
Balancing an expense account
An expense account is a running total of a particular expense during the financial year
An expense account is balanced to show how much has been spent to date and must be included in Income Statement
Rent Paid Dr Cr
date
details
date
details
1 March
Balance b/d
9,000
31 March
Transfer to Income Statement
10,000
20 March
Bank
1,000
10,000
10,000
Mr. Barry
A-Level Accounting Year 12

9. A-level Accounting Year 12
Balance Sheet items include:
Any items categorised as Assets, Liabilities, Capital, Drawings
Non-current Assets and Current Assets e.g. machinery or bank
Non-current Liabilities and Current Liabilities e.g. Debenture or Creditors
Capital
Drawings
Mr. Barry
A-level Accounting Year 12

10. A-Level Accounting Year 12
Balancing a creditor account which has a credit balance
The balancing process here is exactly the same, but the balancing figure goes on the debit side and the balance is brought down on the credit side
R Gupta Dr Cr
date
details
date
details
15 June
Bank
4,000
1 June
Balance b/d
4,000
18 June
Purchases returns
1,000
28 June
Purchases
2,000
30 June
Balance c/d
1,000
6,000
6,000
1 July
Balance b/d
1,000
Mr. Barry
A-Level Accounting Year 12

11. A-Level Accounting Year 12
Further example – balancing a Machinery account
Machinery Dr Cr
date
details
date
details
1 June
Balance b/d
7,000
15 June
Bank
2,000
30 June
Balance c/d
10,000
18 June
Bank
1,000
10,000
10,000
1 July
Balance b/d
10,000
Mr. Barry
A-Level Accounting Year 12