Page 71 - Office Practice and Accounting 10

The following are the main objectives of trial balance.
a. To check arithmetical accuracy: A trial provides a good check on the accuracy
of the work done in preparing the ledger accounts. If the trial balance agrees,
it proves that books are arithmetically accurate and that both the aspects of the
transactions have been correctly recorded in the books of original entry as well
as in the ledger. But if the trial balance totals do not agree, then it shows that
there are some arithmetical errors.
b. To help to prepare the final account: Trading account, profit and loss account
and balance sheet are together known as final account. The trial balance
facilitates to prepare the trading and profit and loss account which reveals the
profitability of the firm. Similarly, it helps to prepare balance sheet to reflect the
financial status of the firm.
c. To help to locate errors: Total of debit and credit side of trial balance must be
equal. If it is not equal, there is arithmetical error either in journal or in ledger.
The trial balance helps to locate the arithmetical errors which can be rectified in
time.
d. To present the summary: Trial balance is a list or statement of ledger balances.
It gives the summarized data of assets, expenses, capital, income and liabilities,
at a glance.

Advantages/Importance of trial balance

i. It helps to check arithmetical accuracy of journal and ledger.
ii. It helps to find out and rectify the error located.
iii. It is helpful in internal audit of the organization.
iv. It helps to summarize the financial transactions.
v. It is helpful in preparation of final account.
vi. It helps to provide information of capital, income, liabilities, assets and expenses
at a glance.
SPECIMEN OF TRIAL BALANCE

Trial Balance of ..........................
As on ..........................

S.N. Particular LF Dr. (Rs.) Cr. (Rs.)
1 2 3 4 5

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