SELF BALANCING AND SECTIONAL BALANCING - I

OBJECTIVES OF SECTIONAL/SELF-BALANCING SYSTEMS:

1.To ensure the accuracy of the ledger accounts,

2.To detect the accounting errors, if any, and pinpoint the place of error without much waste of time and energy.

3.To exercise proper internal control and,

4.To help in the preparation of final accounts within a short period.

Scope of Sub-Divided Ledgers:

Debtors Ledger - The Ledger is used for recording the personal accounts of trade debtors only.
Trade debtors are the persons to whom goods are sold on credit also called as sales ledger, sold Ledger or Customers Ledger.
Accounts other than trade debtors are not recorded in this ledger.

Creditors Ledger - Maintained for recording the personal account of trade creditors only.

General Ledger- Main ledger from which trade debtors and trade creditors are now taken out.

SECTIONAL BALANCING SYSTEM:

In this system the ledger is divided into there sections and the accuracy of the each section can be proved as follows:

1. General Ledger - By preparing the trail balance.

2. Debtors Ledger - By comparing with Total Debtors A/c in General Ledger

3. Creditors Ledger- By Comparing with Total Creditors A/c in General Ledger

When does Debtors Accounts Shows Credit Balance:?

It is due to granting of allowances or return of goods etc. after the settlement of the accounts of some debtors.

When does Creditors Accounts Shows Debit Balance:?

When we return some goods to the supplier after settling the account, the total creditors account shows a debit balance. and vice versa