PREPARATION OF TRIAL BALANCE
Concept & Problem
Trial Balance – Is the report that lists the balance of all general ledger accounts of
a company at a certain point in time. Trial balance is nothing but a summarization
of ledger account.
Source Document
Journalizing
Posting to ledger
Trial Balance
Financial Statements
Profit & Loss
Balance Sheet
Cash Flow
SOCIE
Object of trial balance
1. To provide arithmetic accuracy of books
2. To provide a base for preparation of financial statements
3. To summarize the ledge account
How to prepare trial Balance
1. To make sure all ledger A/C’s are balanced
2. To transfer the closing balance of each ledger A/C to appropriate debit or
credit column.
3. Add up the amount of debit and credit columns
4. If it matches then you are good to go and close the trial balance.
5. If it is not equal accountant have to locate and specifies the errors.
Format
Trial balance as at ………………………………………………………..
S.NO
LEDGER ACCOUNT
1
Cash A/C
xxxxx
Salaray A/c
xxxxx
2
LF
DEBIT
CREDIT
Bank loan A/C
xxxxx
Capital A/C
xxxxx
XXXXX
xxxxx
NB: Double entry system – For every debit there is an equal credit.
Methods
1. Total Method
2. Balance Method
3. Total & Balance Method