JUNIOR CYCLE BUSINESS STUDIES BALANCING AN ACCOUNT
When all the income and expenditure for the period has been recorded, the account must be balanced. The balance shows how much money, if any, is left at the end of the period. The following steps explain how to balance an account.
Step 1
Add up the money on the debit side to find the total. Then add up the money in the credit side to find the total. The figure from the side that adds up to the biggest number (usually the debit side) is the figure that is filled in at the end of the total (€) columns on both sides.
Using the example of Tara’s October weekly cash account, the debit side adds up to €60 and the credit side adds up to €44. Therefore, €60 is filled in at the end of both total columns.
CASH ACCOUNT Date
5/10 9/10
Debit side (money in) Details
Pocket money Birthday money
€ Date
20 3/10 40 6/10 7/10 8/10
60 Step 2
The balance is calculated by subtracting the smaller total transaction value from the larger total transaction value.
Balance = larger total transaction value – smaller total transaction value
In the case of Tara’s cash account, the credit total is subtracted from the debit total: €60 – €44 = €16.
Step 3
The total column that is the smallest needs a balance to make it add up to the total amount. This balance is filled in above the total on this side and is called balance c/d (carried down).
