Meaning of Trial Balance

 A trial balance is a statement showing the
balances, or total of debits and credits, of all the
accounts in the ledger with a view to verify the
arithmatical accuracy of posting into the ledger
accounts. Trial balance is an important statement
in the accounting process as it shows the final
position of all accounts and helps in preparing the
final statements. The task of preparing the
statements is simplified because the accountant
can take the balances of all accounts from the trial
balance instead of going through the whole ledger.
It may be noted that the trial balance is usually
prepared with the balances of accounts.

It is normally prepared at the end of an accounting year. However, an

organisation may prepare a trial balance at the end of any chosen period,

which may be monthly, quarterly, half yearly or annually depending upon its

requirements.

In order to prepare a trial balance following steps are taken:

• Ascertain the balances of each account in the ledger.

• List each account and place its balance in the debit or credit column, as

the case may be. (If an account has a zero balance, it may be included in

the trial balance with zero in the column for its normal balance).

• Compute the total of debit balances column.

• Compute the total of the credit balances column.

• Verify that the sum of the debit balances equal the sum of credit balances.

If they do not tally, it indicate that there are some errors. So one must check

the correctness of the balances of all accounts. It may be noted that all

assets expenses and receivables account shall have debit balances whereas

all liabilities, revenues and payables accounts shall have credit balances

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