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    Trial Balance

    Uploaded by

    Ashish Toppo
    The document discusses the purpose and preparation of a trial balance. A trial balance is prepared after ledger accounts have been balanced to test the arithmetical accuracy of the books of accounts. It contains the names of ledger accounts and their debit and credit balances or totals as of a specific date. The totals of the debit and credit columns must be equal for the trial balance to be accurate. There are three methods for preparing a trial balance - balance method, total method, and total and balance method.

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    Trial Balance

    Uploaded by

    Ashish Toppo
    278 views12 pages
    The document discusses the purpose and preparation of a trial balance. A trial balance is prepared after ledger accounts have been balanced to test the arithmetical accuracy of the books of accounts. It contains the names of ledger accounts and their debit and credit balances or totals as of a specific date. The totals of the debit and credit columns must be equal for the trial balance to be accurate. There are three methods for preparing a trial balance - balance method, total method, and total and balance method.

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    The document discusses the purpose and preparation of a trial balance. A trial balance is prepared after ledger accounts have been balanced to test the arithmetical accuracy of the books of accounts. It contains the names of ledger accounts and their debit and credit balances or totals as of a specific date. The totals of the debit and credit columns must be equal for the trial balance to be accurate. There are three methods for preparing a trial balance - balance method, total method, and total and balance method.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    278 views12 pages

    Trial Balance

    Uploaded by

    Ashish Toppo
    The document discusses the purpose and preparation of a trial balance. A trial balance is prepared after ledger accounts have been balanced to test the arithmetical accuracy of the books of accounts. It contains the names of ledger accounts and their debit and credit balances or totals as of a specific date. The totals of the debit and credit columns must be equal for the trial balance to be accurate. There are three methods for preparing a trial balance - balance method, total method, and total and balance method.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
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    All the transactions of financial nature are recorded in the books of accounts.

    Journal proper and subsidiary books record all business transactions originally. With the help of subsidiary books and journal, we prepare ledger accounts. These ledger accounts have a debit and credit sides. The ledger accounts are balanced. If the credit side exceeds debit side, it is known as credit balance. In the same way, excess of debit side of an account over its credit side shows debit balance. After balancing ledger accounts, we would like to check the arithmetical accuracy of our accounts and for this purpose TRIAL BALANCE is prepared.

    Trial Balance is a statement prepared with Debit and credit balances of the ledger accounts to test the arithmetical accuracy of the books.

    Trial balance is a statement containing balances of all ledger accounts of a business concern on a particular date.

    The trial balance is prepared on specific date. This is why we use the word as on.. with its heading. Trial balance contains the list of all ledger accounts including cash account Trial balance may be prepared with the balances or totals or balances and totals of ledger accounts. The total of the debit and credit column of the amount must be equal. In case of the debit and credit side of the trial balance are equal ,we assume that the principles of Double Entry System and the assumptions of accounting equation have been observed. The difference between the debit and credit side of the trial balance points out that certain mistakes have been committed somewhere.

    OBJECTIVES OF TRIAL BALANCE


    Test of arithmetical accuracy:- If direct posting has been made from
    subsidiary books and ledger account & correct figures have been recorded & copied , the debit & credit total of the trial balance must tally

    Summarized information of Ledger accounts:-it contains a list of all


    ledger account. It presents the name of ledger accounts & the amount of their debit & credit account . It would have been very difficult to access the position of different ledger accounts from subsidiary books & ledger accounts.

    Basis for preparing final accounts:- the ultimate end of maintaining books
    of accounts is to ascertain the result of the business in term of profit & the value of different assets &liabilities. It helps to prepare profit & loss accounts 7 balance sheet , so acts as a source statement for preparing final accounts.

    Useful for making adjustments:- while making final accounts certain


    adjustments regarding closing stocks, outstanding & prepaid expenses, unearned income are to be met. While identifying items for adjustments ,we will have to study the information furnished in trial balance.

    PARTICULARS

    L.F.

    AMOUNT ( in rupees) DEBIT CREDIT

    PARTICULARS L.F. (ledger folio) AMOUNT COLUMN DEBIT COLUMN CREDIT COLUMN

    There are three methods of preparing trail balance. The total of both the debit and credit column of the trail balance equal in all the methods. The following methods can be used for preparing trial balance.

    Balance Method. Total Method. Total and balance method.

    Cont...
    Balance Method: Trial balance is prepared with the
    balance of ledger accounts. Every ledger has got the debit and the credit side. At the end of certain period ledger account is balanced. excess of total of debit side of an account over its credit side is known as debit balance and which is debited . In the same way, excess of credit side of account over its debit side shows credit balance is credited

    Cont
    Total Method: The total of debit and credit side of every account is written in the debit and credit column. Both the debit and the credit must be equal. If it is not equal the errors must me rectified.

    Cont
    Total and balance method: This method
    presents both the balance and total method in the same trail balance. The amount column is divided between total and balance methods. The total of debit and the credit must be equal. The totals of each method will be equal

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