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Hello
I would like to inquire on the T Account question (from Kaplan Publisher).
On 1 January Elma Fudd’s bank account is overdrawn by $1,367.
Payments in the year totalled $8,536 and on 31 December the closing
balance is $2,227 (positive).
What are total receipts for the year?The answer is $12,130.
I don’t understand why would be the closing balance put on the credit side of the bank account. Isn’t the closing balance is positive should put on the debit side?
Please help me. Thank you
The Question: Test your understanding 3
On 1 Jan Elma Fudd’s bank account is overdrawn by $1, 367.
Payments in the year totalled $8, 536 and on 31 Dec the closing balance is $2,227(positive).
What are the total receipts for the year?
Hello sir.
As I was busy searching for explanation, I started to notice. When we carry down a balance, it is always carried down on to the opposite side.
So, the positive closing balance means when we carried down it will be on the right side which is negative right?
We do carry down balances to the opposite side.
But do not talk about positive and negative balances. A debit balance is an asset and a credit balance is a liability.Since they end the year with money at the bank they will end up with a debit balance. This will have been carried forward from the credit side.
I do suggest that you watch my free lectures. The lectures on double entry bookkeeping explain how and why we balance the t-accounts the way we do.
The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well. If you watch them then you do not need to use the Study Text. What you do need is a Revision/Exam Kit because they contain lots of exam-standard questions to practice, and practice is vital to passing the exam.
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