CHAPTER 11
TRIAL BALANCE
Meaning
Trial Balance is a statement that shows different accounts corresponding to
their balances. It also depicts the total of debit and credit balances of different
accounts.
Objectives
To verify the arithmetical accuracy of recorded transactions
To locate and rectify the various errors committed It helps in the
preparation of financial statements
It helps to present all the accounts in a summarised manner.
Methods of Preparing Trial Balance
Totals Method
According to this method, the total of debit and credit side of an account
is shown in the debit and credit columns of the Trial Balance. If the total
of the debit column and the total of credit column of Trial Balance are
equal then the Trial Balance is said to agree, otherwise not.
Example:
Trial Balance (Totals Method)
Debit Credit
Particulars Total Total
Rs Rs
Capital 1,00,000
Salary 5,000
Debtors 10,000 4,000
Creditors 6,000 20,000
Purchaser 80,000
Cash 30,000 5,000
Bank 4,000 6,000
1,35,000 1,35,000
Balances Method
According to the Balances Method, the balance of ledger accounts is
shown in the debit and credit column of the Trial Balance. The balance of
ledger may be either debit balance or credit balance. If the sum of the
balances in the debit column equals the sum of the balances in the credit
column of the Trial Balance, then the arithmetical accuracy is ensured.
Example:
Trial Balance (Balances Method)
Debit Credit
Particulars Balances Balances
Rs Rs
Capital 1,00,000
Salary 5,000
Debtors 6,000
Creditors 14,000
Purchases 80,000
Cash 25,000
Bank (Overdraft) 2,000
1,16,000 1,16,000
Totals cum Balances Method
It is a combination of both the methods, i.e., totals method and balances
method. Arithmetical accuracy is ensured if the sum of the Debit Totals
is equal to the sum of the Credit Totals and the sum of the Debit
Balances is equal to the sum of the Credit Balances.
Example:
Trial Balance (Totals cum Balances Method)
Debit Credit Debit Credit
Particulars Total Total Balance Balance
Rs Rs Rs Rs
Capital 1,00,000 1,00,000
Salary 5,000 5,000
Debtors 10,000 4,000 6,000
Creditors 6,000 20,000 14,000
Purchases 80,000 80,000
Cash 30,000 5,000 25,000
Bank 4,000 6,000 2,000
1,35,000 1,35,000 1,16,000 1,16,000
