Definition
“Brought Down” (b/d) is an accounting term used in bookkeeping to denote the carrying forward of an opening balance from a previous accounting period to the current period’s ledger. The term typically appears in financial records to ensure continuity and accurate summing of accounts over multiple periods. The balance that is ‘brought down’ becomes the starting balance for the new financial period, and it is an essential element in maintaining seamless financial reporting.
Examples
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Example 1
- Previous Period Balance: At the end of March, a ledger account shows a balance of $5,000 on the debit side.
- Brought Down (b/d): On April 1st, this balance is carried forward and recorded as “$5,000 b/d” on the debit side of the ledger for April, signifying the opening balance of the new period.
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Example 2
- Previous Period Balance: A company’s account for office supplies at the end of December shows a balance of $2,000.
- Brought Down (b/d): On January 1st, the same amount is entered as “$2,000 b/d” on the debit side for the beginning of the new year, thus ensuring continuity.
Frequently Asked Questions (FAQs)
Q1: Why is the ‘brought down’ notation important in accounting?
- It ensures that the opening balances are correctly carried forward into the new period, which is crucial for the accuracy and consistency of financial records.
Q2: Where does the ‘brought down’ balance appear?
- It appears on the first line of the ledger account for the new period, signifying the period’s opening balance.
Q3: Is ‘brought down’ only applicable for debit balances?
- No, ‘brought down’ can refer to both debit and credit balances, depending on the account type.
Q4: Can the ‘brought down’ balance be different from the closing balance of the previous period?
- Typically, the ‘brought down’ balance should be the same as the closing balance of the previous period, ensuring accurate accounting. However, adjustments, corrections, or reconciliations can sometimes result in differences.
Q5: What is the difference between ‘brought down’ and ‘carried down’ in accounting?
- ‘Brought down’ (b/d) is used for opening balances in a new period, whereas ‘carried down’ (c/d) denotes closing balances at the end of the current period.
Related Terms
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Carried Down (c/d): Refers to the closing balance at the end of an accounting period that will be brought down to the next period as the opening balance.
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Ledger: A book or other collection of financial accounts of a particular type.
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Trial Balance: A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account columns to ensure that a company’s bookkeeping system is mathematically correct.
Online Resources
- Investopedia - Basic Accounting Principles: Investopedia
- Accounting Coach - Understanding Accounting Basics: Accounting Coach
- Coursera - Financial Accounting Fundamentals: Coursera
- Khan Academy - Introduction to Financial Accounting: Khan Academy
Suggested Books for Further Studies
- “Accounting Made Simple: Accounting Explained in 100 Pages or Less” by Mike Piper
- “Principles of Accounting” by Belverd E. Needles Jr., Marian Powers, and Susan V. Crosson
- “Financial Accounting for Dummies” by Maire Loughran
- “Intermediate Accounting” by Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
Accounting Basics: “Brought Down (b/d)” Fundamentals Quiz
### What does the term 'brought down' (b/d) refer to in accounting?
- [x] An opening balance carried forward from the previous period.
- [ ] A closing balance at the end of the current period.
- [ ] Any adjustment made to the accounts.
- [ ] A written-off expense.
> **Explanation:** 'Brought down' (b/d) signifies an opening balance that has been carried forward into the current period from the previous one.
### Where is the 'brought down' balance normally recorded?
- [x] On the first line of the ledger for the new period.
- [ ] At the end of the ledger for the current period.
- [ ] In the income statement.
- [ ] In the balance sheet only.
> **Explanation:** The 'brought down' balance is recorded on the first line of the ledger for the new period, as it represents the opening balance.
### Can 'brought down' refer to both debit and credit balances?
- [x] Yes, it can.
- [ ] No, it only refers to debit balances.
- [ ] No, it only refers to credit balances.
- [ ] It doesn’t refer to any balances directly.
> **Explanation:** 'Brought down’ can refer to both debit and credit balances, depending on the nature of the account.
### What does 'carried down' (c/d) indicate?
- [x] The closing balance at the end of an accounting period.
- [ ] The same as 'brought down'.
- [ ] Any adjustment made in the ledger.
- [ ] A special type of account.
> **Explanation:** 'Carried down' (c/d) indicates the closing balance at the end of an accounting period, ready to be transferred to the next period.
### Why is 'brought down' crucial for maintaining accounting accuracy?
- [ ] It helps in reducing tax liability.
- [x] It ensures opening balances are correctly carried forward.
- [ ] It provides immediate revenue.
- [ ] It increases asset value.
> **Explanation:** 'Brought down' ensures that the opening balances from the previous period are accurately carried forward, maintaining continuity and accuracy in financial records.
### How should the 'brought down' balance relate to the 'carried down' balance?
- [x] They should be the same in most cases.
- [ ] They should always differ.
- [ ] There should be no relationship.
- [ ] One should be half of the other.
> **Explanation:** The 'brought down' balance should typically be the same as the 'carried down' balance from the previous period to ensure consistency.
### Where is the 'brought down' balance first recorded in new period ledgers?
- [x] On the first line of the ledger.
- [ ] At the bottom of the trial balance.
- [ ] In the middle of the ledger account.
- [ ] In a separate line item for adjustments.
> **Explanation:** The 'brought down' balance is recorded on the first line of the ledger at the start of the new accounting period.
### When transitioning to a new period, what ensures the seamless transfer of balances?
- [ ] Increase in operational revenue.
- [ ] Adjusting entries.
- [x] Recording 'brought down' balances.
- [ ] Filing for tax deductions.
> **Explanation:** Recording 'brought down' balances from the previous period ensures seamless transfer and continuity in the bookkeeping records.
### Which document frequently reviews the accuracy of 'brought down' balances?
- [ ] Income statement.
- [ ] Cash flow statement.
- [x] Trial balance.
- [ ] Bank reconciliation statement.
> **Explanation:** The trial balance reviews and ensures the accuracy of 'brought down' balances for all ledger accounts.
### 'Brought down' balances are parts of which fundamental accounting procedure?
- [ ] Asset depreciation.
- [x] Closing, transferring, and opening balances.
- [ ] Revenue recognition.
- [ ] Expense creation.
> **Explanation:** ‘Brought down’ balances are integral to the procedure of closing the previous period’s accounts, transferring balances forward, and establishing opening balances for the new period.
Thank you for exploring the concept of “Brought Down” in the accounting lexicon and engaging with our sample quiz questions. Keep enhancing your financial knowledge!
