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12 Trial Balance

The fundamental principle of Double Entry System of accounting is that for every
debit entry there must be a corresponding credit entry. In the preparation of journal
as well as ledger, both aspects of transaction are taken into account. Thus for every
debit there is a corresponding credit of an equal amount given to some other account
and vice versa. This implies that the total of debit amount must be equal to the total
of credit amount. If journal entries are correctly posted to different ledger accounts,
the total of all debit posting in the trial balance must be equal to the total of credit
posting in trial balance. If debit totals or balances do not tally with the credit totals or
balances, it means that some mistake has crept in.
Trial balance is the statement of debit and credit balances of ledger balances, which is
prepared to check the arithmetical accuracy of journal and ledger after certain interval
of time. 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 ledger.

Definitions

According to R. N Carter: "Trial balance is the list of debit and credit balance,
taken out from ledger, it also includes the balance of cash and bank taken from
cash book."

In the words of Pickles: "The statement prepared with the help of ledger
balance, at the end of financial year (or at any other date) to find out whether
debit total agrees with credit total is called trial balance."

Thus, we can say that trial balance is a statement in which the debit and credit balances
of all accounts are recorded with the view to ascertain the arithmetical accuracy of the
books of accounts.
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,

182 Office Practice and Accounting 9