● Each side of a journal entry is posted in the same side of the ledger. It means the debit entry of a journal is posted in the debit side and vice-a-versa.
● Balance c/d refers to the balance carried down and balance b/d refers to the balance brought down.
● After posting in ledger, balancing of ledger is done. In the column named Total, the figure comes on the basis of ‘whichever is higher’. Means, if the total of debit side is Rs 10,000 and the total of credit is Rs 5,000, we write Rs 10,000 in the column named Total of both, the debit and the credit side.
● The difference of both sides (in this case, it is Rs 5,000) is written in the last row of the credit side as ‘balance c/d’. This balance is called the debit balance of account or vice-a-versa.
● All expenses and assets represent debit balance.
● All the income and liabilities represent credit balance including capital account.
● Debit balance of personal account represents ‘Amount Receivable’. This comes under the category of assets. For example debtors.
● Credit balance of personal accounts signifies ‘Amount Payable’. This comes under liabilities side and represents that we need to pay this amount which is credited due to goods, service, loan, or advance received.
● Debit side of real account means stock in hand or any kind of assets. Credit balance of Real account is not possible.
● Debit balance of nominal account means expenses of organization.
● Credit balance of nominal accounts means income earned.
● Debit balance of cash book means cash in hand.
● Debit side of Bank book means balance at bank.
● Credit balance of Bank book indicates ‘Bank Overdraft’.
● Debit and credit balances of nominal account (Expenses and income will be nil, because these balances get transferred to trading, and profit & loss account to arrive at profit and loss of the company.
● Balances of real and personal account appear in balance sheet of the company and to be carried forward to next accounting years.
