Self Balancing Ledger System: Definition, Examples, Diagram

Under the Self Balancing Ledger System, the separate trial balance of Each Ledger can be prepared without the help of other ledgers.

Self Balancing Ledger System: Meaning

Each Ledger is Self Balancing Ledger System in the system on the self-balancing system some additional columns drawn in general so that the analysis of each entry pertaining to the specific ledger is also given in the analysis column.

It already discussed in the sectional balancing system and the basic principle of the Self Balancing Ledger System is that the double entry is completed within the Ledger itself. the ledger which contains debit entry is provided with the credit entry and the one which contains credit and it is provided with a debit entry.

Related:

• Sectional Balancing System Practical Examples (Explained).
• Top 4 Differences Between Sectional and Self-balancing system

This is effected by opening an additional account called General Ledger Adjustment Account in each of sales and purchase ledger and two accounts 1. Sales ledger adjustment account and 2. Purchase ledger adjustment account in the general ledger.

Self Balancing Ledger System: Diagram

Example 1.

You have been furnished with the following information by MS Rajeev Agencies Balotra:

• Purchase return 2,700
• cheque issued in favor of creditors 8,32,800
• acceptance of bills payable 1,00,000
• received from debtors 13,42000
• discount allowed 7,500
• credit sales 18,27,000
• credit 9,27,600
• discount received 22,500
• bills receivable 6,00,000

You have to prepare: (1) purchase/bought ledger adjustment account in general ledger (2) Sales ledger adjustment account in general ledger and (3) General ledger adjustment account in the Sales Ledger.

In General Ledger

Sales Ledger Adjustment Account

Bought/Purchase Ledger Adjustment Account 

In Sales Ledger 

General Ledger Adjustment Account

Example 2.

Shri Ram Narayan has ledgers in use, Namely: Sales Ledger, purchase ledger and the nominal ledger which are all kept on the self-balancing system.

From the following particulars for the year 2009-10 prepare the Adjustment Accounts as they would appear in the nominal ledger as on 31st March 2010.

The balance of sundry creditors as of 1st April 2009 6,570, the balance of sundry debtors as of 1st April 2009 3,760.

• Credit purchase 67,000
• Return outward 700
• Credit Sales 90,000
• Sales return 1,500
• Cash sales 9,500
• Paid to creditors allows fans to customers 39,000
• Allowances to customers 500
• Allowances received 900
• Bad debates previously written off now recovered 3,000
• bill receivable received from debtors 26,800
• Collection from debtors 59,000
• Credit balance transferred from purchase ledger to sales ledger 600
• bill receivable dishonored 1200
• Bill payable accepted 24,000
• bad debts are written off 2,000
• dr.balance transfer from sales ledger to purchase ledger 900

In Nominal Ledger

Sales Ledger Adjustment Account

Purchase Ledger Adjustment Account

Example 3.

Ramesh maintenance his books on Self Balancing Ledger System from the following particulars to prepare control accounts in 1. Bought/Purchase ledger and 2. Sales ledger.

1st April 2009 balance of Purchase/Bought ledger debit 700 and credit 30,640, the balance of sales ledger debit 66,930 and credit 1,865. transactions during the year 2009-10 were as follows:

• Credit purchase 72,700
• Sales 1,35,000
• Sales return 500
• Bad debts 1,000
• Purchase return 2,500
• Cash paid to creditors 57,500
• Discount received 320
• Bill Receivable received 10,000
• Bill Receivable Dishonoured 2,500
• Cash paid to debtors 137
• Credit sales 1,16,000
• Cash purchases 11800
• Provision for bad and doubtful debts 270
• Bad debts recovered 600
• Cash received from debtors 8,3000
• Discount allowed 650
• Interest charged to debtors 592
• Bill payable accepted 8,000
• Notary charges debited to party 10
• On 31 March 2010 dr. The balance of bought Ledger 980
• On 31 March 2010 cr. The balance of sales Ledger 266

In Bought Ledger

General Ledger Adjustment Account

In Sales Ledger

General Ledger Adjustment Account

Thus, now you know how Self Balancing ledger System works in accounting.

Read More

• 9 Main Branches or Types of Accounting (Explained with Examples)
• Capital Profits And Revenue Profits with Examples (Update)
• Capital Losses And Revenue Losses with Examples
• Top 10 Best Qualities of an Ideal Financial Statement (With Examples)
• Financial Statements: Meaning Nature And Objectives (Updated)
• Industrial Relations (IR): Meaning, Definitions, Types & Needs
• Top 9 Role of Managerial Economist in Business (Update)
• 21 Role And Importance Of Managerial Economics (Step-by-Step)
• Top 4 Types of Financial Statements For Reporting
• Balance Sheet: Definition, Format and Sample (Updated)
• Top 14 Relationship and Differences between Bookkeeping & Accounting