The A - Z of Detailed Meaning Of Trail Balance
Hello Students today we will discuss about Trial balance so let's begin trial balance. Let's try to understand what is Trial Balance.
 |
The A - Z of Detailed Meaning Of Trail Balance |
‘Trial balance is a statement of the
debit and credit or closing balances of the ledger arranged in separate columns.’
So we know that while maintaining the
records of the business organization the first step would be recording the
transactions. So we record the transaction in the book of prime entry or we
also call it as journal. So we make journal entries for all the transactions. After
that we post them into ledger that is separate individual accounts for each item
in journal. So the second step would be ledger. So after nature the third step
is trial balance. Trial balance is a statement remember it is not an account it
is an statement which contains the list of closing balances of the ledger
accounts.
For example so this is the ledger
problem which we solved in one of our previous sessions before coming for trial
balance. First of all you make sure that you are clear with the concept of
ledger. Trial balance is the list of closing balances of the ledger accounts. Understood
the concept remember trial balance is the first step for preparing the
financial statements of a company. After the preparation of trial balance
various accounts and financial statements are prepared. Like trading and profit
and loss account balance sheet etc. Trial balance will be very useful for
preparing the financial statements of the company. Next let's have a look at
the format of trial balance so first of all it is heading trial balance of here
you need to mention the name of the company for whom you're preparing the trial
balance as it here you need to mention the dead.
The things are same here you need to
mention a name of the accounts so this is particulars column. This is ledger for
your column here this will debit balances and credit balances. When you total
up all the balances on debit side and on credit side they must tally. If your
trial balance is correct alright so for preparing trial balance there are certain
points that you need to remember. They are capitals liabilities and revenues
always recorded on the credit side in the trial balance. If in question there
are any capital a duties or revenues so the name of the account should be
recorder written in the particulars column. Then the amount should be recorded
on the credit side. Remember this point.
This is very helpful for recording
the transactions in the trial balance. Capital liabilities and revenues on
credit side next assets and expenses are always recorded on the debit side in
the trial balance. Again same the name of the account will be returned in the particulars
itself but the AMA needs to be recorded on the debit side. Assets and expenses
you need to remember. Both of these things these are very important for
recording the transactions. Next when both the amount columns are totaled they
should be tallied. So as I said earlier after recording of all the transactions
the next step would be totaling. There should be no difference in the tribal’s
if in case there is a difference in the amount it means that your trial balance
is not correct. There are certain mistakes in your trial balance.
Why do we need to prepare the trial balance?
Now the question arises why we need to
prepare the trial balance that is to test the automatic accuracy. So to test whether
there are any mistakes in the in the calculation or not we need trial balance. To
help in preparing financial statements as I said earlier this trial balance is
the first step in preparation of financial statements. It helps in preparation
of various financial statements for the company. It serves as base for them
right next helps in locating errors. If in case there are any errors it will be easily
located because the trial balance should right if it does not tell. It means
that there are certain errors. We can correct them easily. It helps in
comparison so it always helps in comparison of debit and credit balances of the
business organization.
Trail Balance , What is Trail Balance , Meaning of Trail Balance , Detailed meaning of Trail Balance , 11th Accountancy Topics , Trail Balance with example , Best meaning of trail balance , business,corporate-finance-and-accounting,accounting
No comments:
Post a Comment