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After a period, balancing of each account is done by making the total of both sides. Excess of debit over credit is called as "Debit Balance" and excess of credit over debit is called as "credit balance". Below is an example: XYZ Ltd. Particulars Dr.Amount Particulars Cr.Amount To Opening Bal b/f 5000 By Cash 3000 To Credit Sales 15000 By Discount 1000 By Closing bal c/d 16000 ------------ ------------- 20000 20000 ------------ -------------- Total of debit is Rs.20000 against credit of Rs.4000. Hence Rs.16000 is a debit balance.For every individual account, a separate account is created in ledger. There are two sides of account i.e. debit and credit. Transactions are recorded accordingly.
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