Trial Balance Assignment Help

What is trial balance?

J.R. Batiliboi stated that “A trial balance is a statement, prepared with the debit and credit balances of the Ledger accounts to test the arithmetical accuracy of the books.”

A trial balance can only be made after all the transactions are recorded in the journal and posted in ledger accounts and balancing accounts. It is basically a whole list of ledgers including both revenue and capital accounts of a business. This list will comprise of the value of all the nominal ledgers alongside their respective names and each nominal value will either be a debit or a credit balance. Consequently, the debit balance will be recorded in the debit column and the credit balance in the credit column. It is necessary that the total amount In the debit column comprising of different ledgers accounts is equal to the total value in the credit column comprising of different ledgers accounts. If the amounts on both sides are calculated to be equal then it signifies that there is no error in book keeping mathematically. A trial balance is prepared on an annual basis, normally at the end of every year. The main purpose of preparing a trial balance is to make sure that there is no mathematical error in the business’s book keeping system. Trial balance facilitates the preparation of The trading profit and loss statement and balance sheet and other financial reports as the ledgers listed in trial balance can be used.

Features of Trial Balance

1. Trial balance is basically a list of ledger accounts and cash book.
2. It can be prepared on any date in the whole year but it is preferred that it is prepared at the end of an accounting period.
3. It is mostly used as a working note.
4. It is not a part of double entry book keeping but is a result of it.
5. The most important role of trial balance is to check the mathematical accuracy of posting entries from journal to ledger.
6. It does not necessarily check all the errors made while recording and posting. Therefore, it is not a conclusive proof that there are no errors at all in the book keeping. There might be errors like error in principle which the trial balance is not capable of finding.

Now let’s understand how to prepare a trial balance with the help of an illustration.

Illustration

From the following transactions, pass the necessary Journal entries in the books of Daniels & Co., post them into Ledger and prepare the Trial Balance.

Solution

JOURNAL

Cash a/c

Capital a/c

Purchases a/c

Sales a/c

Sloan a/c

Ramsey a/c

Drake a/c

Drawings a/c

Discount Received a/c

Salaries a/c

Trial Balance

As on 31st December, 2016

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