12 Trail Balance

LEARNING OBJECTIVES 

• To know the meaning and characteristics of Trial Balance 

• To prepare a Trial Balance 

• The debit balances and credit balances of ledger accounts are extracted and written in a Statement Format called 'Trial Balance'.

• This is done to check the arithmetic accuracy of accounts. 

TIT BITS 

• Equalizing the two sides of a trial balance is not the sole and conclusive proof of the complete correctness of books. 

• Trial Balance is a Statement and it is not an account. 

PROFORMA OF A TRIAL BALANCE 

TIT BITS 

• Accounts of all assets, expenses, losses and drawings have debit balances. 

• Accounts of incomes, gains, liabilities and capital have credit balances. 

SCHEDULE OF DEBTORS 

• Instead of writing all individual names of debtors (customers), the total balance is written under the heading "Sundry Debtors" in the Trial Balance.

• The list of debtors is termed as 'Schedule of Debtors'. 

• The word 'Sundry' , in this context, means 'Total'. 

SCHEDULE OF CREDITORS 

• Instead of writing all individual names of creditors (suppliers), the total balance is written under the heading "Sundry Creditors" in the Trial Balance. 

• The list of creditors is termed as 'Schedule of Creditors'. 

• The word 'Sundry' , in this context, means 'Total'. 

ANALYSIS OF TRIAL BALANCE

TIT BITS 

• Debit Balance in a Personal Account shows amount receivable. 

• Credit Balance in a Personal Account shows amounts payable.