Carrying down balances

CAT FA1 Course Notes Contents Page

Carrying down balances Look at this account: To find out how much cash there is now, you have to find the balance on the account ie the net debit or credit amount. Debits = 2,000 + 3,000 + 100 = 5,100 Credits = 200 + 1,400  + 200 + 100 = 1,900 Therefore balance = Dr 5,100 – Cr 1,900 = =  Dr 3,200 This means that there is $3,200 cash i.e. and asset of $3,200. In bookkeeping finding the balance is done in a very formal way: 1. At the bottom of the Dr and Cr sides, enter the larger of the two totals. Here that would be 5,100. 2. To make the smaller column add up to that you have to enter the ‘balancing figure’. Here 3,200 needs to be entered on the credit side. This is marked with ‘Balance c/d’ (‘c/d’ meaning ‘carried down’). 3. This figure is brought down below the totals on the other side. Here $3,200 would be brought down (b/d) on the debit side. A balance brought down on the debit side of the cash account means that there is an asset of cash.