What does balancing accounts mean?
To balance an account means to find the account’s balance—or the difference between debit entries and credit entries.
How it Works
In the days of manual accounting systems, it was necessary to prepare a month-end trial balance.
The trial balance was a list of the balance of each and every account in the general ledger.
First, you had to find the balance of each account.
Some accounts have entries on one side of the account, only.
In this case, the account’s balance is the total of those entries.
Other accounts have entries on both sides of the account.
In this case, you had to find the difference between the two sides.
To do this, you find the total of the largest side and show this on both sides.
Next, you find the difference between the two sides and show this as balance carried down.
Finally, you bring this balance down on the largest side.
This is the balance you record in the trial balance
© R.J. Hickman 2020