trial balance by n. bala murali krishna
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TRIAL BALANCEDEFINITION
It is a statement showing credit and debit balances from the ledger.
Helps arithmetical accuracy and facilitates Final accounts.
TRIAL BALANCEBASIC PRINCIPLE :Since it is double entry book-keeping, hence, Assets and expenses are debit balances Liabilities and incomes are
credit balances.In case of arithmetical inaccuracy identify clerical/principle errors and rectify.
Objectives of trial balanceTo know the arithmetical accuracy of the ledger accounts
In case trial balance does not agree it shows that there are certain errors
It contains all the accounts in a summarised form
It helps in the preparation of the financial statements (Profit and Loss Account and Balance Sheet)
Methods of trial balanceTotals Method
Balances Method
Totals-cum-balances Method
Totals Method
Under this method, total of each side in the ledger (debit and credit) is ascertained separately and shown in the trial balance in the respective columns.
The total of debit column of trial balance should agree with the total of credit column.
Balances Method
Under this method the trial balance is prepared by showing the balances of all ledger accounts and then totalling up the debit and credit columns of the trial balance and assure their correctness.Totals-cum-balances MethodThis method is a combination of totals method and balances method. Under this method four columns for amount are prepared. Two columns for writing the debit and credit totals of various accounts and two columns for writing the debit and credit balances of these accounts.
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