Balancing & Trial Balance

What is the purpose of balancing an account?

To make sure the debit and credit sides of a T-account match, showing the remaining balance at the end of the period.

What does balance c/d mean?

It stands for "carried down" and is the closing balance added to make both sides of a T-account equal at period-end.

What does balance b/d mean?

It stands for "brought down" and is the opening balance of the next period, carried over from the previous one.

What is a Trial Balance?

A list of all balances from the ledger accounts, separated into debit and credit columns, used to check if total debits equal total credits.

What does it mean if the trial balance doesn’t balance?

There’s likely an error in recording – such as missing an entry, using the wrong amount, or misplacing a debit/credit.

Why is the trial balance important before preparing financial statements?

It helps detect mistakes and ensures the books are accurate and complete.

What types of accounts normally have debit balances?

Assets and expenses (e.g., cash, wages, inventory).

What types of accounts normally have credit balances?

Liabilities, equity, and income (e.g., loans, capital, sales).

What’s a simple way to check if a T-account is balanced?

Add both sides. If they’re not equal, calculate and add a balance c/d to the smaller side.

What happens to the balance c/d in the next period?

It becomes the balance b/d and is placed on the opposite side.