Accounting · Balancing Ledger Accounts
In a manual accounting setup, the 'Balancing of Ledger Accounts' is a critical step before preparing the Trial Balance. If the 'Rent Account' shows a total debit of 1,20,000 and a total credit of 0 at the end of the year, how is this account balanced and presented?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The account is left as is because nominal accounts do not require balancing under the accrual system.
- 2The account is not balanced but closed by transferring the 1,20,000 to the Profit and Loss Account since it is a nominal account.✓
- 3The difference of 1,20,000 is written on the debit side as 'To Balance c/d' to ensure both sides equal zero.
- 4The difference of 1,20,000 is written on the credit side as 'By Balance c/d' and then brought down to the debit side of the next period as 'To Balance b/d'.
Correct answer
The account is not balanced but closed by transferring the 1,20,000 to the Profit and Loss Account since it is a nominal account.
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