Trial Balance || Grade 11 || Accounting

  Trial  Balance   

Meaning of trial balance:                                                                                              

After preparing ledger Ac it need to be summarized i.e. to make summery of all items posted in ledger. It is possible with the help of trial balance. Trial balance is a statement of total debit and credit balance of net balance taken from ledger Ac.

Objective of trial balance 

Trial balance provides summary of all items posted in ledger account. It is a statement which records the extracted balances of various ledger account as well as summary all accounting information.

a)   1. To check arithmetical accuracy:-Trial balance is a statement of comparison of debit total with the credit total amount is the further helps in checking the arithmetical accuracy of the books of account by equalizing the total of debit column with the credit column.

b)    2. Helps in the preparation of final account:-Trial balance provides summarized information related to all the items maintained in books of account. Final account is prepare on the summarized balance information taken from trial balance.

c)     3. Helps in preventing from frauds and errors:-Trail balance is a statement which tally debit total with credit .If the debit and credit totals are not equal, it proves that there is some errors in the original books of account .As a result it helps in preventing from frauds and errors occur inn original books of account which the help suspense account.

                                  Format of trial balance

SN	Particular	l.f	Debit Amount	Credit Amount

Notes:

1.  In case of capital is given : Suspense account will be balancing figure either on debit or side of trial balance which is lower.
2. In case of capital is not given : Suspense account is not used rather capital account is balancing figure on credit side of trial balance.

Items debited and credited in trail balance                      

Case 1: When ledger account balance is calculated/given
a)    Items on dr. Balance i.e. Balance bd of ledger ac is posted on debit side of trial balance.
b)    Items on cr balance i.e. Balance bd of ledger account is posted on credit side of trail balance.

Case 2
When trail balance is to be prepared from given column of trial balance.

A.    Assets:                                                                                                                                  

•  Patents, goodwill, copyright, trademark.
•  Pattern, software, formula, license, royalty, loyalty.
•  Furniture and fixture, plant and machinery, computer and machinery.
•  Business premises, land and building, instrument, livestock, loose tools.
•  Lease hold premises, presold premise, and development property.
•  Investment in share and debenture, long term investment, short term investment, loan given.
•  Sundry debtor, ac receivable bills receivable, notes receivable, book debt, closing stock.
• Temporary investment, investment in security, marketable securities, cash in hand, cash at bank, insurance, company inventory.
• Outstanding incomes, accrued income, income due, income receivable, income not receipt.
•  Prepaid expenses, advance expenses, expenses for next year.
•  Leasing assets, spare parts, horses and cart.
•  Preliminary expenses, discount on issue of share and debenture, debt balance of p/l Ac.
•  Design and software
•  Any other current assets and fictitious assets.

B.    Expenses and losses                                                                                                           

• Drawing and purchase, manufacturing expenses, sales return.
• Carriage inward, freight on purchase, custom duty, excise duty, consummative stock.
• Motive power, coal expenses, oil and gas, factory expenses, water supply, octroi expenses, coolie and cartage, dock charge, wages, promotion wages, royalty on production, healing and lighting, fuel expenses, shipping charge , factory rent, insurance.
• Work manager salary, local task, rent and taxes, discount allowed, discount on sale, telephone charge, postage and telegram.
• Audit fee, electricity ,charges , depreciation , salesman salary,  carriage outward, carriage in sale office and selling expenses, administrative  and distribution expenses, bad debt, interest on loan,  loss on sale of fixed assets and investment, loss on revolution of fixed assets .
• Insurance expenses, bank charges, repair and maintenance, advertisement promotion expenses, trade expenses, travelling expenses, loss by fire and accident.
•   Show room expenses, catalogue, expense, sample, expenses , rent of room, market manager salary, delivery expenses salary , postage expenses, commission, to sales manager.
• Sales promotion expenses, tax pay, office lighting expenses, salary and wages, indirect expenses, indirect wages.
• Any other manufacturing office and administrative selling expenses.

Credit column of trail balance                                                                                         

C.     Capital      

·        Capital, additional capital, further capital, reserve, capital reserve, general reserve, specific reserve.

·        Reserve for the contingency, reserve for bad debt.

·        Any other reserve and reserve related items which has impact on.

·        Reserve for bad debt (old).

D.    Liabilities      

·        Bank loan, long term loan, debenture, and bond.

·        Sundry creditor, bills payable, ac payable notes payable.

·        Outstanding expenses due, expenses accrued, expenses payable, expenses unpaid.

·        Bank overdraft, loan from frame, loan from subsidiary.

·        Pension fund, provident fund, provision for tax, provision for dividend, provision for bad debt.

·        Any other items related to current and long term debt.

E.     Income and gains

·        Purchase return, interest received, interest on deposit and investment.

·        Discount receipt, discount on purchase, commission and rent receipt gain and sale of investment, bad debt recovers, appropriations, transfer free assets.

·        Sundry receipt, miscellaneous income, other income,

·        Apprentice premium, sales.

·        Any other income related to operations and non-operations.

Note :- All the italic  word are the most important terms which you will be getting while solving different questions , these are the most important word so focus on it very  carefully .

 

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