Page 103 - Account 10

ii. The heading of a trial balance should be mentioned on the top middle of the page
“Trial balance ...................... Co.
As on ............................”
iii. A trial balance can be prepared on the basis of total figures or balance figures of the
ledger accounts. Thus, the debit and credit totals of the ledgers should be determined
along with the balancing of the accounts.
iv. The ledger accounts should be mentioned along with their serial number so as to
facilitate the counting. It helps to find out whether or not any ledger account is
omitted.
v. The respective ledger page number of the accounts should be mentioned if any in the
L.F. column to facilitate the reference of the required ledger.
vi. All assets, expenses and losses have debit balances and So, they are to be debited in
trial balance. Capital, liabilities, incomes and gains have credit balances and, thus,
are to be credited in it.

Dr. side: Assets, Drawing, Expenses and losses
Cr. side: Capital, Liabilities, income, gain, reserve and surplus

vii. After mentioning all the ledger accounts in the trial balance, its debit and credit sides
should be separately totalled to see whether or not they are equal.
viii. When the two totals of a trial balance are equal, it is supposed that the books of
account are arithmetically accurate; otherwise the books of accounts should be
thoroughly revised as far as possible to locate the arithmetic errors.
ix. When the errors cannot be detected, and there it becomes a problem to proceed
onward for the preparation of final accounts. In such a case, an account called a
‘suspense account’ is opened for the adjustment of the trial balance. The suspense
account is opened for that side where there’s a shortage of amount and totals are
made equal and proceeded onward to prepare final accounts. After finding the errors,
errors are to be detected and corrected by passing journal and suspense account is
removed from the trial balance. It means that, when the debit side of the trial balance
is less than the credit side, suspense account is mentioned in the debit side with the
amount shorting to meet the credit total and vice versa. Later on, when the errors
are found by internally checking or auditing the account, the suspense account is
replaced by the detected ledger account or heading. But one should be familiar with
the fact that, trial balance is not the conclusive measure to check all types of errors in
the books of accounts of a businessman’s transactions.
6. Methods of Preparing Trial Balance

Simply, a trial balance is a statement of ledger balances on a specified period and
prepared in vertical way in the form of a table. There are three methods of preparing a
trial balance which are explained with the following examples.
Methods of Trial Balance

Total Method Balance Method Combined/Mixed Method

102 Aakar’s Office Practice and Accountancy - 10 Trial Balance 103