balance off

Quick Reference

The practice of totalling the debit and credit sides of an account and inserting a balance to make them equal at the end of a financial accounting period. For example, on the debtors’ ledger control account amounts owed will be debited, amounts settled will be credited. When balancing off the account the balance inserted will be on the credit side, representing amounts owed that have still not been settled. On the first day of the next accounting period, the balance will be brought forward from the credit side to the debit side, representing the opening amount of debtors.

Subjects: Accounting.

Reference entries