# 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.

## 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.

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 Ramâ€™s A/c 50000 Mar 31 By balance c/d 100000 Nov 25 To Amitâ€™s A/c 20000 Feb 15 To Shyamâ€™s A/c 30000 100000 100000
##### Ramâ€™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
##### Amitâ€™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
##### Shyamâ€™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 Ajitâ€™s A/c 40000 Nov 24 By Dipuâ€™s A/c 30000 70000 70000
##### Ajitâ€™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
##### Dipuâ€™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

1] Totals Method

Trial Balance as atâ€¦..

 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

#### Â 2]Â Balances Method

Trial Balance as atâ€¦..

 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

#### Â 3]Â Totals-cum- Balances Method

Trial Balance as atâ€¦..

 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

Share with friends

## Customize your course in 30 seconds

##### Which class are you in?
5th
6th
7th
8th
9th
10th
11th
12th
Get ready for all-new Live Classes!
Now learn Live with India's best teachers. Join courses with the best schedule and enjoy fun and interactive classes.
Ashhar Firdausi
IIT Roorkee
Biology
Dr. Nazma Shaik
VTU
Chemistry
Gaurav Tiwari
APJAKTU
Physics
Get Started