Isc Accounts Self Balancing System

Rohit Agarwal 9883248954

Chapter 5 : Self Balancing Ledgers Self-balancing System General/Nominal Ledger

Debtors /Sales /Sold / Customer Ledger

1. Debtors Ledger Adjustment (Con.) A/c

General Ledger Adjustment (Control) A/c

2. Creditors Ledger Adjustment (Control) A/c

Creditors /Purchases /Bought/ Suppliers Ledger

General Ledger Adjustment (Control) A/c

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Sectional Balancing System: The system of Sectional Balancing is a variant of Self Balancing System. Under this system only general ledger is maintained. The account representing the purchases ledger is called Total Debtors Account and that representing the sales ledger is called Total Creditors Account.

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Self Balancing System: Self Balancing System is a system of keeping ledgers, where every ledger is arranged in such a manner that each of them becomes a separate ledger. Each ledger amount is the balance of itself. Under this system, the adjustment accounts are opened to complete double entry

system in the respective ledgers. ƒ

The advantages of Self Balancing System are: (i) It is easier to detect the error in this system, because a separate trail balance is prepared for all the ledgers. (ii) A complete trial balance can be prepared without balancing subsidiary ledgers.

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Difference between Sectional Balancing and Self Balancing: Basis of Self Balancing System Sectional Balancing System Distinction Separate trial balance is prepared in each Trial balance Trial balance is prepared in G. L. only. ledger. Double entry Double entry is completed in each ledger. Double entry is completed in G. L. only. Control Control accounts are opened in all the Control accounts are opened in G. L. only. accounts ledgers. Volume of It involves more accounting work. It involves less accounting work. accounting It is easier to detect the error in this It is difficult to detect the errors in this Detection of system, because a separate trail balance is system because a separate trial balance errors prepared for all the ledgers cannot be prepared for each ledger. Write answer of these questions in your copy: 1. Distinguish between Sectional Balancing and Self Balancing. [ISC 2005] 2. State the advantages of Self Balancing System? [ISC 2006] 3. What is the purpose of opening the adjustment accounts in the self balancing system? [ISC 2007] 4. Name the two accounts that are responsible for completing the double entry under sectional balancing system. State in which ledger they are kept. [ISC 2008] Total Debtors Account ƒ

Sectional balancing

General Ledgers

Total Creditors Account

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Rohit Agarwal 9883248954 In The General Ledger Dr. Debtor Ledger Adjustment A/c Cr. Particulars Rs. Particulars To Balance b/d *** By Blalance b/d To General Ledger Adj. A/c *** By General Ledger Adj. A/c Credit Sales *** Cash Received B/R Dishonoured *** Bank (Chq received) Bank (Chq Dishonoured) *** B/R Received Interest & Cartage charged *** Returns Inwards B/R (Cancelled Upon Renewal) *** Discount Allowed Discount Disallowed *** Bad debts Endorsed B/R Dishonoured *** Transfer To Balance c/d *** By Blalance c/d ***

Rs. *** *** *** *** *** *** *** *** *** *** ***

In The Debtors Ledger Dr. General Ledger Adjustment A/c Cr. Particulars Rs. Particulars To Blalance b/d *** By Balance b/d To Debtor Ledger Adj. A/c *** By Debtor Ledger Adj. A/c Cash Received *** Credit Sales Bank (Chq received) *** B/R Dishonoured B/R Received *** Bank (Chq Dishonoured) Returns Inwards *** Interest & Cartage charged Discount Allowed *** B/R (Cancelled Upon Renewal) Bad debts *** Discount Disallowed Transfer *** Endorsed B/R Dishonoured To Blalance c/d *** By Balance c/d ***

Rs. *** *** *** *** *** *** *** *** *** *** ***

Note: Cash sales, Provision for bad and doubtful debts' Provision for discount on debtors, Bad debts recovered, B /R discounted, Trade discount do not affect the aforesaid accounts. In The General Ledger Dr. Creditors Ledger Adjustment A/c Cr. Particulars Rs. Particulars Rs. To Balance b/d *** By Balance b/d *** To General Ledger Adj. A/c *** By General Ledger Adj. A/c *** Cash Paid *** Credit Purchases *** Bank (Chq issued) *** Endorsed B/R Dishonoured *** B/P Accepted *** Interest & Cartage charged *** B/R Endorsed *** B/P Withdrawn *** Returns Outward *** Discount Returned *** Discount Received *** By Balance c/d *** Transfer *** To Balance c/d *** *** ***

In The Creditors Ledger Dr. General Ledger Adjustment A/c Particulars Rs. Particulars To Balance b/d *** By Balance b/d To Creditors Ledger Adj. A/c *** By Creditors Ledger Adj. A/c Credit Purchases *** Cash Paid Endorsed B/R Dishonoured *** Bank (Chq issued) Interest & Cartage charged *** B/P Accepted B/P Withdrawn *** B/R Endorsed Discount Returned *** Returns Outward To Balance c/d *** Discount Received Transfer By Balance c/d ***

Note: Cash purchases, Provision for discount on creditors, Trade discount, Bill payable met during the year do not affect the aforesaid accounts.

Cr. Rs. *** *** *** *** *** *** *** *** *** *** ***