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Accountancy > Trial Balance and Rectification of Errors > Preparation of Trial Balance
Trial Balance and Rectification of Errors

Preparation of Trial Balance

A Trial Balance is a statement that shows the total debit and total credit balances of accounts. The total of debit amounts shall be equal to the credit amounts. It thus verifies the arithmetical accuracy of the postings in the ledger accounts. We will now study the methods of Preparation of Trial Balance – totals method, balance method and total-cum-balance method.

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Preparation of Trial Balance

We can prepare the Trial Balance in the following three ways:

1] Totals Method

In this totals method, we ascertain the total of each side in the ledger i.e. debit and credit, separately and show them in the respective columns in the Trial Balance. Here also the total of the column with debit totals should tally with the total of the column of the credit totals. The dual aspect concept holds true in this case also.

However, totals method is not in use widely as it does not determines the accurate balances of the accounts and thus, also does not help in the preparation of the Financial statements or final accounts.

2] Balances Method

In this method, we total the debit side and the credit side of the accounts and balance them. We then write these debit or credit balances of the ledger accounts in the respective debit and credit columns in the Trial Balance. A trial balance tallies when the total of the debit column is equal to the total of the credit column.

This method is the most common method as it shows the net effect and also helps in the preparation of the financial statements. Usually, in the trial balance instead of showing the individual accounts of the debtors and creditors, we show Sundry Debtors and Sundry Creditors accounts, respectively.

Preparation of Trial Balance: Totals Method, Balance Method etc.

Source: shutterstock

3] Totals-cum-Balances Method

In this method, we prepare four columns. In two columns we write debit and credit totals of accounts and in the other two columns, we write the debit and credit balances of accounts. This method consumes a lot of time and is a duplicate of work. Hence, it is rarely in use.

Solved Example for You

Q: From the following information prepare trial balance using all the three methods.

Capital A/c
Date Particulars Amount Date Particulars Amount
Mar 31 To balance c/d 150000 Apr 1 By Cash A/c 140000
Sep 1 By Cash A/c 10000
150000 150000
Cash A/c
Date Particulars Amount Date Particulars Amount
Apr 1 To Capital A/c 140000 Mar 31 By Salary A/c 40000
Sep 1 To Capital A/c 10000 Mar 31 By Bank A/c 50000
Mar 31 By Drawings A/c 10000
Mar 31 By balance c/d 50000
150000 150000
Salary A/c
Date Particulars Amount Date Particulars Amount
Mar 31 To Cash A/c 40000 Mar 31 By balance c/d 40000
40000 40000
Drawings A/c
Date Particulars Amount Date Particulars Amount
Mar 31 To Cash A/c 10000 Mar 31 By balance c/d 10000
10000 10000
Bank A/c
Date Particulars Amount Date Particulars Amount
Mar 31 To Cash A/c 50000 Jan 1 By Furniture A/c 30000
Mar 31 By balance c/d 20000
50000 50000
Furniture A/c
Date Particulars Amount Date Particulars Amount
Jan 1 To Bank A/c 30000 Mar 31 By balance c/d 30000
30000 30000
Purchases A/c
Date Particulars Amount Date Particulars Amount
May 1 To Ram’s A/c 50000 Mar 31 By balance c/d 100000
Nov 25 To Amit’s A/c 20000
Feb 15 To Shyam’s A/c 30000
100000 100000
Ram’s A/c
Date Particulars Amount Date Particulars Amount
Mar 31 To balance c/d 50000 May 1 By Purchases A/c 50000
50000 50000
Amit’s A/c
Date Particulars Amount Date Particulars Amount
Mar 31 To balance c/d 20000 Nov 25 By Purchases A/c 20000
20000 20000
Shyam’s A/c
Date Particulars Amount Date Particulars Amount
Mar 31 To balance c/d 30000 Feb 15 By Purchases A/c 30000
30000 30000
Sales A/c
Date Particulars Amount Date Particulars Amount
Mar 31 To balance c/d 70000 Jun 15 By Ajit’s A/c 40000
Nov 24 By Dipu’s A/c 30000
70000 70000
Ajit’s A/c
Date Particulars Amount Date Particulars Amount
Jun 15 To Sales A/c 40000 Mar 31 By balance c/d 40000
40000 40000
Dipu’s A/c
Date Particulars Amount Date Particulars Amount
Nov 24 To Sales A/c 30000 Mar 31 By balance c/d 30000
30000 30000

Answer:

1] Totals Method

Trial Balance as at…..

Name of the account L.F. Debit Total Credit Total
Capital 150000
Cash 150000 100000
Drawings 10000
Bank 50000 30000
Salary 40000
Furniture 30000
Purchases 100000
Ram 50000
Amit 20000
Shyam 30000
Sales 70000
Ajit 40000
Dipu 30000
Total 450000 450000

 2] Balances Method

Trial Balance as at…..

Name of the account L.F. Debit Amount Credit Amount
Capital 150000
Cash 50000
Drawings 10000
Bank 20000
Salary 40000
Furniture 30000
Purchases 100000
Ram 50000
Amit 20000
Shyam 30000
Sales 70000
Ajit 40000
Dipu 30000
Total 320000 320000

 3] Totals-cum- Balances Method

Trial Balance as at…..

Name of the account L.F. Debit Total Credit Total Debit Amount Credit Amount
Capital 150000 150000
Cash 150000 100000 50000
Drawings 10000 10000
Bank 50000 30000 20000
Salary 40000 40000
Furniture 30000 30000
Purchases 100000 100000
Ram 50000 50000
Amit 20000 20000
Shyam 30000 30000
Sales 70000 70000
Ajit 40000 40000
Dipu 30000 30000
Total 450000 450000 320000 320000

 

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