Definition: Carried Down (c/d)
‘Carried down’ (c/d) is an accounting term used in book-keeping to describe an amount that is transferred from the closing balance of the current period to the opening balance of the next period. This practice ensures the continuity of financial statements from one accounting period to another. It is represented in ledgers as an indication that certain balances, whether credit or debit, will be brought forward to the next accounting period.
In double-entry book-keeping, a balance that is carried down from one ledger account can either reflect an asset, liability, equity, revenue, or expense balance, depending on the nature of the account.
Examples
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Carrying Down a Debit Balance:
- Suppose a company has a Supplies account with a closing debit balance of $1,200 as of December 31st. This balance would be ‘carried down’ (c/d) to the Supplies account for the new year starting January 1st, appearing as the opening balance.
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Carrying Down a Credit Balance:
- If a company’s Accounts Payable ledger shows a closing credit balance of $10,000 on June 30th, that balance will be ‘carried down’ (c/d) to July 1st, representing the opening balance for the new month.
Frequently Asked Questions (FAQs)
Q: Why is the term ‘carried down’ necessary in book-keeping?
A: The term ‘carried down’ (c/d) signifies the transfer of closing balances to the new period, maintaining the continuity and accuracy of financial statements across different accounting periods.
Q: Is ‘carried down’ used in all types of accounting systems?
A: Yes, ‘carried down’ is a fundamental concept applicable to most accounting systems that use periodic financial records, including manually maintained ledgers and computerized accounting systems.
Q: How does ‘carried down’ differ from ‘brought down’?
A: ‘Carried down’ (c/d) indicates the transfer of a balance to the next period, while ‘brought down’ (b/d) denotes the reception of this balance as the opening balance in the new period.
Q: What happens if a carried down balance is not transferred correctly?
A: Incorrect transfer of a carried down balance can lead to discrepancies in the financial statements, impacting the accuracy of financial reporting and potentially leading to errors in business decisions.
Q: Are there automated systems for carrying down balances?
A: Yes, contemporary accounting software can automate the process of carrying down balances, reducing manual errors and ensuring timely and accurate financial record-keeping.
Related Terms
- Brought Down (b/d): The balance that is brought into a new period from the previous period, often the converse entry to ‘carried down’.
- Closing Balance: The amount in an account at the end of an accounting period before it is carried down.
- Opening Balance: The amount in an account at the beginning of an accounting period, which is usually the carried down amount from the previous period.
- Double-Entry Accounting: A system of accounting in which every entry to an account requires a corresponding and opposite entry to a different account.
- Ledger: A book or other collection of financial accounts.
Online References
Suggested Books for Further Studies
- “Bookkeeping Essentials: How to Succeed as a Bookkeeper” by Steven M. Bragg
- “Financial & Managerial Accounting for MBAs” by Peter D. Easton, John J. Wild, Robert F. Halsey
- “Fundamental Accounting Principles” by John Wild, Ken W. Shaw, and Barbara Chiappetta
Accounting Basics: “Carried Down (c/d)” Fundamentals Quiz
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