Welcome to class! 

In today’s class, we will be talking about the ledger and the balancing of ledger accounts. Enjoy the class!


Balancing of Ledger Accounts classnotes.ng

By the end of the lesson, you should be able to;

  • Use concept mapping to classify ledgers into personal, impersonal, and private
  • Balance Ledger Accounts
  • Enumerate the Divisions of the Ledger


The ledger is the principal book of an account which contains, in a classified form, the permanent records of all the financial transactions of a business.

Format of a ledger account
Date Narration Folio Amount Date Narration Folio Amount

The recording into the ledger is done in classified form using ledger accounts.

The Ledger account is divided into two sides i.e. The Debit and The Credit.

Therefore in accounting, entries are described as being ‘debited’ or ‘credited’ to particular accounts. Transactions are recorded in the Ledger based on the double-entry principle.


Balancing Ledger Accounts

At the end of the month (or a year or at some other convenient intervals), it is usual to balance the ledger accounts that are kept by the business. The balance of each ledger account is the difference between the two sides of the account and it represents the amount which is left in that account.

The steps necessary to balance a ledger account are summarized as follows:

  1. Using a calculator, add-up each side of the account and find the difference between the total of the two sides.
  2. Enter this difference on the next available line on the side with the smaller total. Enter the date (usually the last day of the month) in the date column and the word “Balance” in the Details column. It is usual to insert “c/d” in the folio column. This is the abbreviation for “carried down” and indicates where the double entry for this item will be made.
  3. Now total each side of the account. This is done by drawing total lines and inserting the total figure between the lines. It is usual to show a single line above the total and a double line below the total. The totals of an account must be on the same level and must be the same figure.
  4. Make the double entry for the balance carried down. On the line below the totals, write the amount of the balance on the opposite side to where the words “Balance c/d” were written. Enter the data (usually the first day of the next month) in the date column and the word “Balance” in the Details column. It is usual to insert “b/d” in the folio column. This is the abbreviation for “brought down” and indicates where the double entry for this item was made

Record the following transaction in the ledger of F. Sanusi for the month of July 2016.

July 1             Started business with N50, 000 cash

“      3              Bought goods for cash N8, 500

“      7              Bought goods on credit N11, 600 from K. Nasiru

“     10             Sold goods for cash N14, 000

“     14             Returned goods to K. Nasiru N2, 000

“     18             Bought goods on credit N18, 000 from S. Dauda.

“     21             Returned goods to S. Dauda N5, 000

“     22             Sold goods to A. Femi N27, 000 on credit

“     24             Paid K. Nasiru’s account by cash N9, 600

“     25             A. Femi returned goods worth N3, 000 to us

“     27             Bought ceiling fan for the shop by cash N6, 000

NB: (a) If the total of the debit entries exceeds the total of the credit entries the account is said to have a debit balance.

(b) If the total of the credit entries exceeds the total of the debit entries, the account is said to have a credit balance.


Business Accounting 1 Exercise 3.11 A

The sub-divisions of the ledger

As a business grows, the volume of transactions increases and the number of ledger accounts required to keep the financial records increase. It will, therefore, be necessary to divide the ledger into different sections.

Dividing the ledger into sections makes it more convenient to use as the same type of accounts can be kept together and the task of maintaining the ledger can be divided between several people. The ledger is usually divided into the following specialized areas:

  1. Cash Book – e.g. the main Cash Book and the Petty Cash Book
  2. Sales Ledger – This is also referred to as the Debtors Ledger. All the personal accounts of debtors (credit customers) are kept in the sales ledger
  3. Purchases Ledger – This is also referred to as the Creditors Ledger. All the personal accounts of creditors (credit suppliers) are kept in the Purchases Ledger
  4. General Ledger (or Nominal Ledger) – Apart from the Cash account, the bank account and the accounts of debtors and creditors, all the remaining accounts are kept in General Ledger. This ledger will contain accounts of assets, liabilities, expenses, incomes, sales, purchases and returns. Asset accounts are known as real accounts. Accounts for expenses, income, gains and losses are known as nominal accounts.

The above classifications of the ledger must be reflected when transactions are recorded in the ledger using the double-entry principle.


  1. What is a ledger?
  2. List and explain three classifications of the ledger.
  3. List six accounts found in the nominal ledger.

Reading assignment

  1. Simplified and Amplified financial Accounting page 80 – 94
  2. Business Accounting 1 page 37 – 48
General evaluation
  1. What is a trial balance?
  2. Give the format of a trial balance with ten items.
  3. Explain the purpose of the Trial balance.
  4. Explain the principle of the double-entry system.
  5. State four differences between the ledger and the journal.

Weekend assignment

  1. The purchase of a typewriter for office use for N65, 000 should be debited to bank account    B. purchases account    C. cash account     D. equipment account
  2. Carriage inwards are incurred on goods on display   B. sold    C. purchased    D. on return
  3. Return inwards is also called carriage inwards    B. carriage outwards    C. purchases returns    D. sales returns
  4. Which of the following accounts will have a credit balance? purchases account    B. returns account    C. returns outwards account     D. drawings account
  5. An account is said to have a debit balance because the first entry made in it is on the debit side   B. there are more entries on the debit side than on the credit side    C. total value of debit entries is more than the total value of credit entries    D. there is no entry at all on the debit side


  1. List four features of the ledger.
  2. List and explain three classifications of the ledger.


In our next class, we will be talking about Source Documents: Purpose, Characteristics and Functions.  We hope you enjoyed the class.

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