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Objects of preparing Trial Balance

April 24, 2019 by admin Leave a Comment

Contents

  • Trial  Balance
  • Objects of preparing Trial Balance :

Trial  Balance

The total of all the accounts with debit balances should equal the total of all the accounts with credit balances. This list is known as a trial balance.

In the double entry system every entry has its corresponding credit and debit. It follows, that at any given point of time, the posting from Journal, day books and cash book to the ledger is completed, the debit balances standing in all the ledgers including the cash book will equal the credit balances.

The next stage after posting accounts to the ledger is the preparation of a Trial Balance. The debit and credit balances of accounts are entered in this statement. The total of the debit and the total of the credit side must agree.

The trial balance is thus a list of the balances on the ledger accounts. If the totals of the debit and credit balances entered on the trial balance are not equal, then an error or errors have been made either:

1. In the posting of the transactions to the ledger accounts; or

2. In the balancing of the accounts; or

3. In the transferring of the balances from the ledger accounts to the trial balance.

Objects of preparing Trial Balance :

1. It forms the very basis on which final accounts are prepared.

2. It helps in knowing the balance on any particular account in the ledger.

3. It is used as a test of arithmetical accuracy.

The trial balance is the stepping stone for the preparation of financial statements.

Filed Under: Trial Balance Tagged With: debit and credit balances, financial statements, Journal, ledger accounts, Objects of preparing Trial Balance, Objects Trial Balance, preparation of a Trial Balance, preparation of financial statements

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