Ledger

Debit balance of ₹2,500 which is carried forward as Balance b/d

Step 1: Drawings A/c is debited when the owner withdraws money for personal use (Bank A/c is credited). Step 2: Since only one entry of ₹2,500 on the debit side exists with no credit entries, the debit side total (₹2,500) is greater than the credit side (₹0). Step 3: The balance = ₹2,500 on the DEBIT side, written as 'Balance c/d' on the credit side to equalise both sides. Step 4: This debit balance is then brought down as 'Balance b/d' on the debit side. Step 5: In the chapter's illustration, Drawings A/c shows exactly this pattern – debit ₹2,500 with Balance c/d on credit side and Balance b/

Bank Overdraft Account

Step 1: To determine the normal balance of an account, we apply the Golden Rules: Assets have debit balances; Liabilities and Capital have credit balances; Expenses have debit balances; Revenues have credit balances. Step 2: Furniture Account – it is an ASSET, so it always has a DEBIT balance. Step 3: Drawings Account – it reduces capital but is treated as a contra-capital account with a DEBIT balance during the period. Step 4: Bank Overdraft Account – a bank overdraft means the business owes money to the bank. It is a LIABILITY, so it always has a CREDIT balance. Step 5: Carriage Account – it

'Balance c/d ₹35,300' on the credit side; 'Balance b/d ₹35,300' on the debit side of next period

Step 1: Debit total = ₹1,02,000; Credit total = ₹66,700. Since debit > credit, Cash A/c has a DEBIT balance. Step 2: Balance = ₹1,02,000 – ₹66,700 = ₹35,300. Step 3: To balance the account, the difference (₹35,300) is written on the SHORTER side (the credit side) as 'Balance c/d' to make both sides equal at ₹1,02,000. Step 4: This is exactly the pattern shown in the chapter's Illustration 2 for Cash A/c. Step 5: In the next period, 'Balance b/d ₹35,300' is written on the DEBIT side because the original debit balance is brought forward. The rule is: c/d and b/d are always on OPPOSITE sides – c/

Because transactions are ultimately classified and summarised here after being first entered in the journal, making it both the final destination and the main reference book

Step 1: 'Book of Final Entry' – Transactions are FIRST recorded in the Journal (book of original entry) and THEN posted to the Ledger. The ledger is where transactions FINALLY rest after passing through the journal. Hence it is called the Book of Final Entry. Step 2: 'Principal Book of Accounts' – The ledger contains ALL accounts (assets, liabilities, capital, revenue, expenses). It is the MAIN/PRINCIPAL book because it provides the complete picture of every account. Step 3: The journal alone cannot tell you the total balance of, say, the Cash Account – you need to go to the ledger. Step 4: Th