Trial Balance Accounting Methods and Procedures-How to prepare trial balance? What is trial balance in accounting? Author: Ckrishwa
A trial balance is an abstract of debit and credit balances of every head of account. These abstract of debit and credit are drawn from the general ledger.
After posting all the debit balances and credit balances from the General Ledger, in the trial balance, debit column and credit column of the trial balance has to be summed up. If the totals of both debit and credit are agree or equal then the trial balance is tallied.
Otherwise there may be some error in the basic accounts like Payment voucher, Journal voucher, Cash book entry, receipt book entry, Bank reconciliation and General Ledger entries.
Possible reasons if the trial balance is not agreed or tallied are:
Wrong cash book entry in the general Ledger.
Payment voucher entry in the Cash book has to be checked.
Journal voucher entry in the general Ledger is to be checked.
Bank reconciliation postings in the general Ledger is to be verified.
Balancing of debit and credit in the general ledger has to be verified.
Debit balances and credit balances have to be correctly carried over to Trial balance.
Unless otherwise the error is located and rectified in the basic accounts the trial balance may not tally.
Normally trial balance is prepared for monthly, quarterly, half-yearly and annually.
Trial balance helps the business or company to ascertain the exact financial position and also helps to take remedial actions for the development of business or company.
Trial balance is an important record for auditing the company or business accounts by the auditors. It is a mandatory record required by the auditors to certify the accounts of the company or business.
