By now you should have noticed that for every debit entry given to one account, or for every series of debits given to several accounts, there is a credit or series of credits of the same amount given to some other account. accounts and vice versa. . It follows, therefore, that at any time the debit balances in all general ledger accounts will be equal to the credit balances.
At the end of the financial year (or at any other time) the balance (or totals) of all the general ledger accounts are drawn and a program is prepared in journal form to check whether, in fact, the total debits are equal to total credits. This balance schedule is called a Trial Balance.
If the totals agree, what does it mean? It provides a reasonably reliable check and tests the arithmetical accuracy of accounting entries.
If the totals don’t match, what does it mean? It shows that there is definitely something wrong b (some error) either in the approval of the double entry or in the extraction of balances.
Trial Balance Definition
According to Carter, “The trial balance is the list of debit and credit balances, drawn from the general ledger, it also includes the cash and bank balances drawn from the cash book.”
According to Pickles, “The account statement prepared with the help of the general ledger balances, at the end of the fiscal year (or at any other date) to find out whether the debit total matches the credit total is called a Trial Balance” .
According to Rowlland, “The final statement of balances, joint and mixed, is called the Trial Balance.”
Ideal definition, “On the basis of different definitions given by different accountants at different times, the following ideal definition of trial balance can be adopted:
“According to the double entry system, after recording all the transactions in the journal and posting them in the ledger and determining their balances, the state prepared to determine the arithmetic accuracy of the accounts on a given date is called the Trial Balance. It is the statement, on the basis on which the profit and loss account and the balance sheet are prepared”.
Analyzing the above definition, we get the following features of Trial Balance:-
(1) According to double entry system. after recording all transactions until all Ute business transactions are recorded and accounted for, strictly in accordance with the double-entry system, a trial balance cannot be drawn.
(2) After finding out the differences of the debit and credit sides of all general ledger accounts: all open accounts in the general ledger are totaled and the balances (differences) are determined, only then can the balance of Test.
(3) Prepared on a certain date: Generally, the trial balance is prepared at the end of the accounting year, but it can also be prepared monthly, semi-annually or quarterly.
Preparation of Trial Balance
The Trial Balance can be prepared by taking into consideration the total of each side of each ledger account. Therefore, you can follow the “Total Method” or the “Balance Method”.
whole method
If the total of the debit sides of all accounts in the ledger is placed in one column of the list and similarly the total of the credit sides of all accounts in the ledger is placed in another column from the list, then this total list (Trial Balance) will be known to have been prepared with the Total Methods.
balance method
The second method of preparing the Trial Balance is to find out the difference of the sides of each account. If the debit side of an account is larger, insert the difference on the credit side of the account. It is known as ‘debt balance’. If the credit side of an account is greater, insert the difference into the debit side of the account. It is known as ‘credit balance’. Now prepare a list of balances (Trial Balance) by placing all debit balances in one column and credit balances in another column. This method is known as the balance method.
