Accounting process step -3

1. By
S.SALOMY
Asst professor

2. • Trial Balance is a list of closing balances of
ledger accounts on a certain date and is the
first step towards the preparation of financial
statements. It is usually prepared at the end of
an accounting period to assist in the drafting
of financial statements.

3. • Ledger balances are segregated into debit
balances and credit balances.
• Asset and expense accounts appear on the
debit side of the trial balance whereas
liabilities, capital and income accounts appear
on the credit side.

4. Purpose of a Trial Balance
• Trial Balance acts as the first step in the preparation of financial
statements. It is a working paper that accountants use as a basis
while preparing financial statements.
• Trial balance ensures that for every debit entry recorded, a
corresponding credit entry has been recorded in the books in
accordance with the double entry concept of accounting. If the
totals of the trial balance do not agree, the differences may be
investigated and resolved before financial statements are prepared.
Rectifying basic accounting errors can be a much lengthy task after
the financial statements have been prepared because of the
changes that would be required to correct the financial statements.
• Trial balance ensures that the account balances are accurately
extracted from accounting ledgers.
• Trail balance assists in the identification and rectification of errors

5. S.no PARTICULARS L.F DEBIT CREDIT
1 Cash account xxx ---
2 Capital account --- xxx
3 Purchase account xxx ---
4 Sales account --- xxx
5 Sales return account xxx ---
6 Purchase return account --- xxx
7 Discount allowed xxx ---
8 Discount received --- xxx
9 Drawings account xxx ----
10 Salaries accounts xxx ----
11 Rent account xxx ----
12 Bank account xxx ----
13 Bank loan account --- xxx
TOTAL XXX XXX

6. From the following balances extracted from the books of a trader, prepare Trial Balance as on 31st March, 2006
PARTICULARS Rs
Cash in hand 4200
Cash at Bank 16800
Bills Receivable 18000
Bills payable 16000
Sundry debtors 24600
Sundry creditors 24600
32400
Capital 50000
Drawings 18000
Sales 105000
Purchases 75000
Carriage Inward 2700
Salaries 12000
Advertisement 2400
Insurance 1600
Furniture 7500
Stock 18600