Trial Balance in Accounts

1. TRIAL BALANCE
DEFINITION
• It is a statement showing credit
and debit balances from the
ledger.
• Helps arithmetical accuracy and
facilitates Final accounts.

2. TRIAL BALANCE
BASIC 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

3. Objectives of trial balance
Ø To know the arithmetical accuracy of the
ledger accounts
Ø In case trial balance does not agree it
shows that there are certain errors
Ø It contains all the accounts in a
summarised form
Ø It helps in the preparation of the financial
statements (Profit and Loss Account
and Balance Sheet)

4. Methods of trial balance
1) Totals Method
2) Balances Method
3) Totals-cum-balances Method

5. 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.

6. 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.

7. Totals-cum-balances Method
This 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.