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Trial Balance

Published in: Accountancy | B.Com Tuition
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    Sukhbinder S

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Definition of Trial and Balance-Problem Sum and Solutions

  • 1
    TRIAL BALANCE Introduction Trial Balance is a list of closing balances of ledger accounts on a certain date and is the first step towards the preparation of financial statements. It is usually prepared at the end of an accounting period to assist in the drafting of financial statements. Ledger balances are segregated into debit balances and credit balances. Asset and expense accounts appear on the debit side of the trial balance whereas liabilities, capital and income accounts appear on the credit side. If all accounting entries are recorded correctly and all the ledger balances are accurately extracted, the total of all debit balances appearing in the trial balance must equal to the sum of all credit balances. Purpose of a Trial Balance Trial Balance acts as the first step in the preparation of financial statements. It is a working paper that accountants use as a basis while preparing financial statements. Trial balance ensures that for every debit entry recorded, a corresponding credit entry has been recorded in the books in accordance with the double entry concept of accounting. If the totals of the trial balance do not agree, the differences may be investigated and resolved before financial statements are prepared. Rectifying basic accounting errors can be a much lengthy task after the financial statements have been prepared because of the changes that would be required to correct the financial statements. Trial balance ensures that the account balances are accurately extracted from accounting ledgers. Trail balance assists in the identification and rectification of errors.
  • 2
    Question 1. Pre are a Trial Balance with the followin information : Sr. No. (v) (vii) Solution: S. Nov Name of Account Balance R) Capital Cash Creditors Sales Heads of Accounts Sr. No (ii) (iv) (vi) (viii) Dr. Name of Account Stock Debtors Bank Loan Purchases Balance R) 70,000 (i} Capital Stock (iii} Cash (iv} Debtors (v} Creditors (vi} Bank Loan (vii} Sales (viii} Purchases Total Question 2. 70,000 180,000 300,000 200,000 Cr. zoo,ooo 100,000 300,000 Prepare the Trial Balance of Ankit as on 31st March, 2013. He has omitted to open a Capital Account: Bank Overdraft Sales Purchases Return Debtors Wa es Ca ital 85.000 8.10.ooo 22,500 00.500 96.000 Purchases Cash in Hand Creditors Sales return E ui ment O enin Stock 4.45.000 8,500 215,000 15.750 25.000 3.009500
  • 3
    Solution: S. No. iiv iiiw iv. v. viv vii. viii. x. xi. xii„ Trial Balance as on March 31, 2013 Heads of Accounts Bank Overdraft Sales Purchase Return Debtors Wages Capital (Balancing Figure) Purchases Cash in Hand Creditors Sales Return Equipment Opening Stock Total 400,500 96,000 445,000 8,500 15,750 25,000 300,500 12, 91,250 Cr. 85,000 810,000 22,500 245,000 12, 91250

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