Accounting checks for trial balance, preparation of trial balance

At this time, you should have noticed that for each debit given to an account, or for each series of debits given to multiple accounts, there is a credit or a series of credits with an equal amount given to some other accounts, and vice versa. It follows that the debit balances on all ledger accounts correspond to credit amounts each time.

At the end of the financial year (or at any other time), the balance (or sum) of all general ledger accounts is extracted and a schedule is drawn up in journal form to test whether the total debits actually correspond to the total credits. This balance sheet is called a trial balance.

If the totals agree – what does that mean? It provides reasonably reliable control and proves the arithmetic accuracy of the accounting records.

If the totals disagree – what does it mean? It shows that there is definitely something wrong b (some error), either when ordering the double entry or in the extraction of balances.

Definition of Trial Balance

According to Carter, “Trial Balance is the list of debit and credit amounts taken from the ledger, and it also includes the balance of cash and banks taken from a cash book.”

According to Pickles, “the statement prepared using the ledger balance at the end of the financial year (or on any other date) to find out whether the debit amount matches the total amount of the credit is called trial balance”.

According to Rowlland, “The final inventory of balance, common and mixed, is called trial balance.”

Ideal definition, “Based on different definitions given by different accountants at different times, the following ideal definition of trial balance may be adopted:

“According to the double entry system, after recording all transactions in the journal and posting them in the ledger and finding their balances, the statement ready to ascertain the arithmetic accuracy of accounts at a particular date is called trial balance. It is the statement based on from which is drawn up trade, profit and loss account and balance sheet. “

By analyzing the above definition, we obtain the following properties of sample balance: –

(1) According to double entry system. After recording all transactions until all Ute business transactions are recorded and posted, strictly according to the double entry system, a trial balance cannot be recovered.

(2) After finding the differences in the debit and credit side of all general ledger accounts: – All the accounts opened in the general ledger are aggregated and balances (differences) are ascertained, only then can the trial balance be prepared.

(3) Prepared for a specific date: Generally, trial balance is prepared at the end of the financial year, but it can also be prepared monthly, bi-annually or quarterly.

Preparing the Trial Balance

Trial balance can be prepared either taking into account the sum of each page of each ledger account. Thus you can follow either “Total Method” or “Balance Method”.

Overall method

If the total debit pages for all accounts in the ledger are placed in one column of the list, and the corresponding sum of credit page for all accounts in the ledger is placed another column in the list wins, then this list of the total amount (trial balance) will be known to have been manufactured by the assembled methods.

balance Method

The other method of preparing trial balance is to find out the difference in the pages of each account. If the debit page of an account is larger, insert the difference on the account’s credit page. It is known as ‘debit balance’. If the credit side of an account is larger, insert the difference on the debit side of the account. It is known as ‘credit balance’. Now prepare the list of balances (trial balance) by placing all debit balances in one column and credit value in another column. Such a method is known as balancing method.