What type of balance does balance c/d represent in cash accounts?

In cash accounts, the balance c/d (carried down) represents a credit balance. This occurs when the total cash outflows (payments) exceed the cash inflows (receipts) during a reporting period, resulting in an overall credit balance on the cash account.

When cash is received, it is recorded as a debit, which increases the cash balance. Conversely, when cash is paid out, it is recorded as a credit, which decreases the cash balance. Therefore, if at the end of the period, the total credits exceed the total debits, this creates a credit balance that is carried down to the next accounting period.

A debit balance would signify that cash inflows exceeded outflows, providing a positive cash position. A zero balance would indicate that cash inflows and outflows were perfectly balanced, which doesn’t represent the concept of c/d effectively. A negative balance typically indicates overdrafts or liabilities rather than standard cash account practices. Hence, identifying that c/d represents a credit balance reflects an understanding of how cash accounts function concerning debits and credits in the context of financial transactions.