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Note on Procedures of Preparation to Trial Balance

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A trial balance is prepared on daily or monthly or yearly basis as per the requirement of the business. It is prepared on a given date in a separate sheet of paper. The trial balance is prepared using a total method or balance method or compound method.

  1. Total method: Under this method trial balance is prepared with the debit and credit totals of all the ledger accounts.
  2. Balance method: Under this method trial balance is prepared with the debit and credit balance of all the ledger account.
  3. Compound method: Under this method trial balance is prepared both with the total and balance of all the ledger account. This method is a combination of total and balance method which is also known as total cum balance method.

Generally, the trial balance is prepared by using the balance method. Under the trial balance, first of all, the transactions are recorded either in journal or subsidiary books. Thereafter posting is made in the ledger and balance are obtained. Finally, the trial balance is prepared with the help of these ledger balances. The specimen of the trial balance under balance method is as follows:

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Each column of trial balance records the information as follows:

1. Serial number (S.No.): It records the serial number of the account.

2. Head of the account: It records the name of the ledger account.

3. Ledger folio (l.F): It records the name of the page number of the ledger where the concerned account is located.

4. Debit balance: It records the amount of the account having a debit balance.

5. Credit balance: It records the amount of the account having a credit balance.

The following is the list of possible items, which are included in the trial balance.

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  • A trial balance is prepared on daily or monthly or yearly basis as per the requirement of the business.
  • Total method: Under this method trial balance is prepared with the debit and credit totals of all the ledger accounts.
  • Balance method: Under this method trial balance is prepared with the debit and credit balance of all the ledger account.
  • Compound method: Under this method trial balance is prepared both with the total and balance of all the ledger account. 
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Very Short Questions

The trial balance can be prepared on daily or monthly or yearly basis as per the requirement of the business. It is prepared on a given date in a separate sheet of paper. It is prepared either using total method or balance method or compound method. The following are the procedures of preparing trial balance:

  1. Total method
    Under the total method, the trial balance is prepared with the debit and credit totals of all the ledger accounts.
  2. Balance method
    Under the balance method, the trial balance is prepared with the debit and credit balances of all the ledger accounts.
  3. Compound method
    Under the compound method, the trial balance is prepared with the debit and credit totals and balances of all the ledger accounts. Hence, the compound method is the combination of total and balance methods, which is also known as total cum balance method.

Trial Balance of Amar Enterprises

As on 31st Ashadh

S.No.

Heads of Account

LF

Debit Balance

Credit Balance

1.

Opening Stock

40,000

2.

Purchases

20,000

3.

Sales

66,000

4.

Sundry debtors

5,000

5.

Sundry creditors

6,000

6.

Sales return

500

7.

Purchase return

1,000

8.

Capital

20,000

9.

Drawing

1,500

10.

Cash balance

26,000

Total

93,000

93,000

Trial Balance of Sapana Traders

As on 31st Ashadh

S.No.

Heads of Account

LF

Debit Balance

Credit Balance

1.

Capital

3,00,000

2.

Wages

15,000

3.

Bank loan

40,000

4.

Cash

5,000

5.

Interest paid

10,000

6.

Creditors

30,000

7.

Investment

1,00,000

8.

Opening stock

70,000

9.

Purchases

2,50,000

10.

Salary

70,000

11.

Sales

1,00,000

12.

Sales return

5,000

13.

Reserve fund

35,000

14.

Account payable

20,000

Total

5,25,000

5,25,000

Solution:

S. No.

Heads of Account

LF

Debit balance

Credit balance

1.

Opening stock

10,000

2.

Furniture

15,000

3.

Purchases

30,000

4.

Salary

15,000

5.

Sales

50,000

6.

Carriage

5,000

7.

Capital

20,000

8.

Creditors

5,000

Total

75,000

75,000

Solution:

S. No.

Heads of Account

LF

Debit balance

Credit balance

1.

Capital

50,000

2.

Bank

30,000

3.

Cash

15,000

4.

Bills payable

10,000

5.

Land and building

45,000

6.

Reserve fund

25,000

7.

Creditors

15,000

8.

Debtors

10,000

Total

1,00,000

1,00,000

Solution:

Trial Balance

As on 31st Chaitra

S. No.

Heads of Account

LF

Debit balance

Credit balance

1.

Furniture

30,000

2.

Sales

2,12,000

3.

Purchases

2,50,000

4.

Discount received

5,000

5.

Debtors

5,000

6.

Bank loan

80,000

7.

Purchase return

15,000

8.

Sales return

7,000

9.

Depreciation

12,000

10.

Bills receivable

8,000

Total

3,12,000

3,12,000

0%
  • The trial balance is prepared on ______ basis as per the requirement of the business.

    monthly


    all the options are correct


    yearly


    daily


  • In how many ways, the trial balance can be prepared?

    None


    Three


    Two


    Four


  • ______  is also known as total cum balance method.

    Total Method


    Balance Method


    None of them


    Compound Method


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