Principles

of Accounts
BOOKS OF
ORIGINAL ENTRY
Balancing the Books and Posting End of Period Totals
Learning Outcomes:

In this lesson, you will learn how to:

● Appreciate the concept of balancing
● Balance the cash book
● Interpret the balances of the cash books
● Indicate the treatment of totals from books of original entry

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Balancing off the Books

At the end of an accounting period, typically

at the end of a month or year, it is necessary
to find the balance on each books of original
entry in order to check the correctness of the
ledger accounts. The process is referred to
as ‘balancing off the books’ or balancing the
journals.

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What is a Balance?

In bookkeeping the term balance means the net

difference between the debits and credits on each
side of the books. If the debits are greater than the
credits the balance will be a debit balance. If the
credits are greater than the debits the balance will
be a credit balance.

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What is a Balance?

The account balance at the start of an accounting

period is referred to as the beginning balance or
the opening balance. The balance at the end of an
accounting period is known as the ending balance
or closing balance.

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The Balancing off Process

At the end of the accounting period the books needs

to be balanced off in four stages as follows:
● Total both the debit and credit sides of the books.
● Calculate the balance (the difference between the total debits and total
credits)
● Add a one sided entry to make the totals on both sides of the account
equal. This is referred to as the balance carried down or balance c/d
● Complete the double entry with an equal and opposite entry
underneath the totals. This is referred to as the balance brought down
or balance b/d

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Balancing Terminology

Balance b/f, c/f, b/d, c/d are often used in accounting,

especially financial accounting. In fact, it is rear to solve any
accounting problem without using any of these terms. Here
are their meaning and what they do in accounting.
● Balance b/f means balance brought forward: When you begin
recording any account with the balance from;
○ old books of account or from previous accounting year or
○ that appearing on an earlier page of the journal

● Balance b/d means balance brought down: When you start recording
any account with the balance from;
○ previous month or
○ that appearing immediately above in the journal.

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Balancing Terminology

● Balance c/f means balance carried forward: When you total-up the
debit & credit sides of an account & put the difference on the shorter
side, so as to agree the totals, if it is to be carried forward to;
○ new books of account or accounting from next year or
○ new page

● Balance c/d means balance carried down: When you total-up the
debit & credit sides of an account and put the difference on the
shorter side, so as to agree the totals, if it is to be carried forward to;
○ next month or
○ a line below in the same page

● In conclusion
○ - b/f is followed by c/f and
○ - b/d is followed by c/d

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Balancing the Cash Book

At regular intervals cash books will be

balanced. The process is the same as for
the ledger accounts, which will be fully
explained in Section 4. Please see
balanced cash book (from our previously
worked example) on the next slide.

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 Balancing the Cash Book
Dr CASH BOOK Cr

Date Details Folio Discount Cash Bank Date Details Folio Discount Cash Bank
allowed received

$ $ $ $ $ $

Sept 1 Balances b/d 635 4 838 Sept 1 MNH 60 1 140

Supplies

2 K Anson 20 780 3 General 82

expenses
5 Sales 1 884 4 Bank 73
Charges
6 Leo 30 1 170 7 Island 130 2 470
Adams Traders Ltd

7 Cash C 1 500 7 Bank C 1 500

7 Balance c/d 937 4 605

50 2 519 8 288 190 2 519 8 288

Sept 8 Balance b/d 937 4 605

Additional Notes

● The balanced cash book reveals the business has

$937 in cash and $4 605 at the bank on September 8.
● A credit balance on the bank account would indicate
that the business was overdrawn at the bank.
● Fortunately, this bank account has a debit balance
meaning that its account is not overdrawn

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Balancing the Petty Cash Book
PETTY CASH BOOK Page 6

Receipts Date Details Folio/ Payments Cleaning Postage General Purchase Folio
Voucher expenses ledger
$ $ $ $ $ $

200.00 Aug 1 Cheque

4 Postage 178 18.23 18.23

7 General
Expenses 179 26.29 26.29

14 Cleaning 180 38.80 38.80

19 Postage 181 11.43 11.43

24 Cleaning 182 37.22 37.22

29 Supplier
(TXQ Ltd) 183 33.18 33.18

165.15 76.02 29.66 26.29 33.18

Balance c/d 34.85

200.00 200.00

34.85 Sept 1 Balance b/d

Additional Notes
● The balanced cash book reveals the business has
unspent cash in hand of $34.85 on September 1.
● At regular intervals the totals shown in the books of
original entry will be posted to the ledger accounts.
● The following table on the next slide will summarize
how totals are treated

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The treatment of Totals from books
of Original Entry

Total(s) in books of original entry Treatment

Purchases book Posted to the debit side of the purchases

account in the general ledger

Sales book Posted to the credit side of the sales

account in the general ledger

Return outwards book Posted to the credit side of the return

outwards account in the general ledger

Return inwards book Posted to the debit side of the return

inwards account in the general ledger
The treatment of Totals from books
of Original Entry
Total(s) in books of original entry
Petty cash book analysis columns
Cash book discount columns
Treatment
• Totals of expense columns are posted to
the relevant expense accounts in the
general ledger.
• Entries in a column for payments to
accounts payable are posted to the
individual accounts payable accounts in
the purchases ledger. (The totals of this
column is for reference only and is not
posted.)
• The total of the discounts allowed column
is posted to the debit side of the discount
allowed account in the general ledger.
• The totals of the discounts received
account is posted to the credit side of the
discount received account in the general
ledger.
Summary Points
● Be sure you are able to explain why the discount columns in
a cash book are not balanced.
● You should also be able to recognize, interpret and record a
credit balance in the bank column of a cash book.
● Be sure to fully explain the purpose of the analysis section of
the petty cash book and how it is used in accounting
systems.
● You should be able to fully explain the steps involved in
balancing the cash book and petty cash book.
● Be sure to fully demontrate explain how balances and totals
from the books of original entry are treated and recorded.
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