CBSE Class 11-commerce Answered

Accounting process involves identification of financial transactions and events, recording them, classifying, summarising, interpreting and communicating financial information to the users in the understandable format.

 

It starts with recording of identified transaction in the original books of accounts. Once recorded, these transactions are classified based on their nature and posted to to their respective ledger accounts. Once ledger posting is done i.e., when all transactions/entries are debited and credited to the ledger accounts; debit and credit columns of ledger accounts are totaled and any difference is recorded on the shorter side to balance both debit and credit side. Such a process of totalling debit and credit sides of ledger accounts and then balancing both sides by recording difference on the shorter side is termed as Balancing of account.