Trial balance

Trial Balance
Meaning, Objective and Format

Meaning
 Prepared under the fundamental principle of
double enter system.
i.e. for every amount of debit, there is an
equal amount of credit.
 It is prepared after closing all the ledger
accounts.
 It can also be used to prepare the final accounts
of the business.
 The trial balance is a statement which is prepared
at the end of a financial period using the debit and
credit totals or balances of all ledger account with
a view to ascertain the arithmetical accuracy of
the recordings of the financial transactions of the

Definition
 R.N.Carter: “Trial balance is a list of debit and
credit balances, taken out from ledger; it also
includes the balances of cash and bank taken
from cash book.”
 William Pickles: ”The statement prepared with
the help of ledger balances, at the end of
financial year to find out whether debit total
agrees with credit total is called trial balance.”

Objectives
 To check the arithmetical accuracy:
As it is based on the double entry principle of debit
equals credit, the debit and credit columns of trial
balance must always be equal. If not, they are
assumed to be arithmetically wrong.
 To help locate accounting errors:
It is the starting point of locating errors.
 To summarize the financial transactions:
It is prepared with a view to summarize all the
financial transactions of the business.
 To provide the basis for preparing final accounts:
As it is a statement of the debit and credit balances, it
is used as a basis for preparing the final accounts.

Specimen of Trial Balance
S.No Heads of Account L.
F.
Debit
Balance
(Rs.)
Credit
Balance
(Rs)
Liability
Income
Gain
Assets
Expenses
Loss
0.00
0.00
0.00
0.00
0.00
0.00
Total 0.00 0.00

Trial balance

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