T-accounts and balancing off
Posting to ledger accounts and working out closing balances with c/d and b/d.
ACCA exams this helps with: FA Financial Accounting See the ACCA map
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What it is: A T-account is one account drawn in the shape of the letter T. The account name goes on top. Debits go on the left. Credits go on the right.
Why you need it: Each account collects every transaction for one item, such as Cash or Rent. This lets you see the total for that item.
What you do: Post each journal entry to the correct side. At the end of the period, add up both sides. The difference is the balance. Write it on the smaller side as “Balance c/d” so both sides are equal. Then write it on the other side, below the totals, as “Balance b/d” to start the next period.
Example. Cash starts at £100. The business receives £40 and pays out £30. Left side: £100 + £40 = £140. Right side: £30. Balance = £140 − £30 = £110. Write “Balance c/d £110” on the right, so both sides total £140. Then write “Balance b/d £110” on the left for the next period.
Key words
- Ledger
- The complete set of a business’s accounts, such as cash, sales, rent and receivables.Example: The general ledger contains every account used to prepare the trial balance.
- Balance c/d
- “Balance carried down”. The amount written on the smaller side of an account at the end of a period so that both sides add up to the same total.Example: Debits £3,300 and credits £450. Write £2,850 as “Balance c/d” on the credit side so both sides total £3,300.
- Balance b/d
- “Balance brought down”. The closing balance of an account, written as the first line of the next period. It sits on the opposite side to the balance c/d.Example: £2,850 is carried down on the credit side at the end of March, then brought down on the debit side as the opening balance for April.
- Balancing off
- The process at the end of a period of adding up both sides of an account, writing in the balance c/d, and bringing the balance down to the next period.Example: At the end of each month, a bookkeeper balances off the cash account to find the closing cash.
Learn
Each account is drawn as a letter T. Debits go on the left. Credits go on the right. Each line shows three things: the date, the name of the other account in the entry, and the amount.
How to post a journal entry
The journal says: debit Cash £500, credit Sales £500.
- In the Cash account, write £500 on the left. In the details, write “Sales”.
- In the Sales account, write £500 on the right. In the details, write “Cash”.
How to balance an account (find what is left)
- Add up the left side. Add up the right side.
- Take the bigger total. Write it at the bottom of both sides, on the same line.
- On the smaller side, write the difference above the total. Label it Balance c/d (“carried down”). Now both sides add up to the same total.
- Below the totals, write the same amount on the other side. Label it Balance b/d (“brought down”). This is the starting balance for the next period.
Example: Cash has £900 on the left and £650 on the right. The bigger total is £900. The difference is £900 − £650 = £250. Write “Balance c/d £250” on the right, so the right side totals £900. Below the totals, write “Balance b/d £250” on the left.
Watch it explained
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Videos from YouTube tutors
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Worked example
Bank: opening balance £1,000 debit. Received £600 from a customer. Paid £250 for electricity and £900 to a supplier.
Debits total £1,600 and credits total £1,150. The £450 difference is carried down on the credit side so both sides total £1,600, then brought down on the debit side as the opening balance.
Practice questions
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