After a lot of experimenting I have figured out the issue. The following sample request given in the Balanced Processing tutorial under "Creating An Account" does not work for some reason at least it doesn't work in TEST marketplace.
curl https://api.balancedpayments.com/v1/marketplaces/TEST-MPiuxfzhprKGoIc4yZ0OuNQ/accounts \
-u 099e55e07f7311e2b923026ba7c1aba6: \
-d "card_uri=/v1/marketplaces/TEST-MPiuxfzhprKGoIc4yZ0OuNQ/cards/CC4R7KXv0jiDTxo5W6Gg5PnM"
Solution: It works if you skip the "card_uri". And after creating the account you have to associate the account with the card in a separate PUT request.