Balancing of an Account

Definition of Balance, Debit Balance and Credit Balance:

The difference between the sum of the two sides of an account is called the balance. This is the most important part of an account as it shows value or position of asset, liability, capital, income or expenses of which the account is a record. If the total of the debit side exceeds the total of credit side then this would be represented by a debit balance and opposite is true for a credit balance.

When there is only one entry in an account, then obviously that item is the balance or difference between the two sides. It perhaps seems needless to go through the process of balancing such an account. However this is still done and it does serve as a means of showing that all the accounts have been looked at and balanced at the same time.

Procedure/Method/Format for Balancing of an Account or (T-Account):

The procedure of balancing an account can be illustrated with the help of following transaction of a bank account:


(1) Add up the amounts columns of both sides of the account and write them on a separate sheet of paper.


(2) Find out the difference between the totals of two sides giving the account balance.


This is debit balance as total of debit side is more than the total of credit side (total of debit side > total of credit side).

(3) Write down the difference on the next available line of the side with the smaller total.


As total of credit side is less than the total of debt side so this balance is entered on the credit side just after last transaction, given on the credit side.


(4) Use the term “balance c/d” (balance carried down) in the details column for the difference to indicate that balance is carried down.


(5) Enter the total of both sides in the same line by using single or double lines below the figures; inserting the difference between the two sides on the smaller side will make both sides equal.


(6) On the very next date to the date of calculating balance c/d; this balance has been brought down as “balance b/d” (balance brought down) on to the side to which it really belong. This means debit balance should be brought down on the debit side, whereas credit balance should be brought down on the credit side.


Reasons for Balancing Accounts:

There is no hard and fast rule, however, the need for balancing an account may arise when:

(1) The existing page allocated for the account is full and balance is required to be calculated and transferred to the next page.

(2) Business needs information for a particular item for which an account already exists.

(3) Trial balance is being prepared for which accounts’ balances are needed for its preparation.