# Ledger Account Other Aspects

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# Ledger a/c balance » Is it a debit balance or a credit balance

 You may come across ledger accounts with Postings On both the sides of the ledger account Postings Only on the credit side i.e. with only credit postings i.e. having a debit side sub-total of zero, Postings Only on the debit side i.e. with only debit postings i.e. having a credit side sub-total of zero. No postings at all. This is a theoretical possibility. We may sometimes have to think of ledger accounts without any postings also.

# • Balance c/d or c/f

The term Balance c/d(f) appears
• Just before the total at the end
• On the side having the shorter/lesser total
• On the side opposite to the side having the greater total
• On the side opposite to the side having the posting "Balance b/d or b/f towards the end.

# • Balance b/d or b/f

The term Balance b/d(f) appears
• Just after the total at the end
• On the side having the greater total
• On the side opposite to the side having the shorter/lesser total
• On the side opposite to the side having the posting "Balance c/d or c/f towards the end.

# • Debit Balance

We say that the ledger account has a debit balance
• If the debit side sub-total is greater than the credit side sub-total.
• If the posting "To Balance b/d (or b/f)" appears just after the total towards the end.
• If the posting "By Balance c/d (or c/f)" appears just before the total towards the end.

# • Credit Balance

We say that the ledger account has a credit balance
• If the credit side sub-total is greater than the debit side sub-total.
• If the posting "By Balance b/d (or b/f)" appears just after the total towards the end.
• If the posting "To Balance c/d (or c/f)" appears just before the total towards the end.

# • Zero/Nil Balance

We say that the ledger account has a Nil balance
• If the credit side sub-total and the debit side sub-total are equal.
 Dr Cash a/c Cr
Date Particulars J/F Amount
(in Rs)
Date Particulars J/F Amount
(in Rs)
24/06/05 To Balance b/d 2,00,000 24/06/05
25/06/05
By Bank a/c
By Furniture a/c

1,50,000
50,000
sub-total   2,00,000   sub-total   2,00,000
Total   2,00,000   Total   2,00,000

For Ledger accounts with a Zero/Nil balance, we do not see the posting "Balance c/d" or "Balance b/d" as there is no balance to be carried forward at the end of the period and to be brought forward at the beginning of the next period.

# • No Journal » No Ledger

We sometimes prepare the Ledger accounts directly. Because we prepare them directly, it does not mean that the ledger accounts exist without the Journal.

After getting well accustomed with the accounting process, we will be able to orally think of the journal entry and thereby be in a position to post the information into the ledger without preparing the journal.

The ledger postings follow the journal recordings i.e. the ledger gets its contents from the journal. Thus we say, No Journal No Ledger.

# • Every Ledger posting should have a Journal Support

This is a rule that we should be conscious of. By reading the ledger posting, we will be able to identify the journal entry that is the basis for the ledger posting.

Even the postings "Balance b/d" and "Balance c/d" have journal support. They are supported by the Opening Entry and the Closing Entry respectively (We will deal with them in detail later on).

# Transferring balance from one Ledger a/c to another

We do not generally use the wordings, transferring from one ledger account to another. But we can interpret an accounting transaction as a transfer transaction. This is a simple idea that would enable you to derive journal entries easily.

What happens when we transfer the balance in a ledger account to another ledger account.

Consider the transaction Paid Cash into Bank Rs. 1.50,000

Assuming the Cash a/c to be having a debit balance of Rs. 2,00,000.

Journal in the books of M/s __ for the period from ____ to _____
Date V/R
No.
L/F Debit Amount
(in Rs)
Credit Amount
(in Rs)
18th Dr
1,50,000
1,50,000

## General Ledger[Books of Mr. Ibrahim]

 Dr Cash a/c Cr
Date Particulars J/F Amount
(in Rs)
Date Particulars J/F Amount
(in Rs)
24/06/05 To Balance b/d 2,00,000 24/06/05 By Bank a/c 1,50,000
sub-total   2,00,000   sub-total   1,50,000
25/06/05 By Balance c/d 50,000
Total   2,00,000   Total   2,00,000
25/06/05 To Balance b/d 50,000

 Dr Bank a/c Cr
Date Particulars J/F Amount
(in Rs)
Date Particulars J/F Amount
(in Rs)
24/06/05
24/06/05
To Balance b/d
To Cash a/c

28,000
1,50,000

sub-total   1,78,000   sub-total   0
25/06/05 By Balance c/d 1,78,000
Total   1,78,000   Total   1,78,000
25/06/05 To Balance b/d 1,78,000

Transfer of an amount of Rs. 1,50,000 from the Cash a/c to Bank a/c
⇒ Transferring a debit balance of Rs. 1,50,000 from Cash a/c to Bank a/c.

# • Transfer of Debit Balance

When we transfer a debit balance from one account to a second/another account, we
• Debit the Second account and
• Credit the First account.

# • Transfer of Credit Balance

When we transfer a credit balance from one account to second/another account, we
• Credit the Second account and
• Debit the First account.

# • A transaction can be interpreted either ways

Theoretically, a transaction can be interpreted either way. Consider a transaction Paid Cash into Bank Rs. 1.50,000

 Transfer of a debit balance from Cash a/c to Bank a/c Debit the Second account - Bank a/c Credit the First account - Cash a/c Transfer of a credit balance from Bank a/c to Cash a/c Credit the Second account - Cash a/c Debit the First account - Bank a/c

Paid Cash into Bank Rs. 1.50,000
Dr. Bank a/c 1,50,000
Cr. Cash a/c 1,50,000

This idea is to enable us to learn different types of interpretations which would be helpful in problem solving.

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