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Trial Balance

Q.N.1.What do you mean by trial balance?                                                                                                                                        

Ans: Meaning: - After posting the accounts in the Ledger, a statement is prepared to show separately the debit and credit balances and to check the arithmetic accuracy of the accounts of a certain periods such a statement is known as the Trial Balance.

The agreement of a trail balance ensures arithmetical accuracy only.  A concern can prepare trail balance at any time, but its preparation as on the closing date of an accounting year is compulsory.

Definition: According to M.S. Gosav "Trail balance is a statement containing the balances of all ledger accounts, as at any given date, arranged in the form of debit and credit columns placed side by side and prepared with the object of checking the arithmetical accuracy of ledger postings”.


Q.N.2.What is the objectives of trial balance? Mention its features or characteristics.                                  

Ans: - Objectives of Trial Balance:

i) To Ascertain the Arithmetical Accuracy of Ledger Accounts: The agreement of a trail balance ensures arithmetical accuracy of books of books of accounts.

ii) To help in preparing Final Accounts: Financial statements are normally prepared on the basis of the Trial Balances. Otherwise, the work may be difficult, if not impossible. Preparation of financial statements, therefore, is the second objective of preparing a Trial Balance.

iii) Summary of Each Account: The trial balance offers a summary of the Ledger. The ledger may have to be referred to only when more detail is required in respect of an account.

iv) To Help in Locating Errors: The Trial Balance helps in locating errors in books-keeping work. It should, however, be noted that it does not disclose all the errors in book-keeping work but only the arithmetical inaccuracies.

Features of trial balance: The following are the important features of a trail balances:

(i) A trail balance is prepared as on a specified date.

(ii) It contains a list of all ledger account including cash account.

(iii) It may be prepared with the balances or totals of Ledger accounts.

(iv) Total of the debit and credit amount columns of the trail balance must tally.

(v) It the debit and credit amounts are equal, we assume that ledger accounts are arithmetically accurate.

(vi) Tallying of trail balance is not a conclusive profit of accuracy of accounts.


Q.N.3.Describe the methods of preparing the Trial Balance. Differentiate Between Trial Balance by Balance Method and Trial Balance by Total Method.                                                                                                                                 

Ans: METHODS OF PREPARING TRAIL BALANCE: A trail balance refers to a list of the ledger balances as on a particular date. It can be prepared in the following manner:

(i)          Total Method: According to this method, debit total and credit total of each account of ledger are recorded in the trail balance.

(ii)        Balance Method: According to this method, only balance of each account of ledger is recorded in trail balance. Some accounts may have debit balance and the other may have credit balance. All these debit and credit balances are recorded in it. This method is widely used.

Difference between Balance Method and Total method of Preparing trial Balance:

Trial Balance By Balance Method

Trial Balance by Total Method

1) It can be prepared after all the Ledger accounts have been balanced.

1) It can be prepared immediately after the completion of posting from books of original entry to the Ledger.

2) It shows the balances of all the accounts in the Ledger.

2) It shows the total amounts of the debit and credit sides in each Ledger Accounts.

3) It considers only those accounts which show a balance. If an account shows no balance it will not be considered.

3) It considers all accounts of the Ledger.


Q.N.4. What is the Classification of Errors?                                                                                                                                        

Ans: All the errors can be classified into the following four categories:

  1. Errors of Commission
  2. Errors of Omission
  3. Errors of Principle
  4. Compensating Errors


Q.N.5. What are the errors                                                                                                                                                         

                                (a) Disclosed by trial balance

                                (b) Not disclosed by trial balance?

Ans: Trial balance disclosed some of the errors and does not disclosed some other errors. This is given below:

        (a) Errors disclosed by trial balance:

i) Wrong totaling of subsidiary books

ii) Posting of an amount on the wrong side

iii) Omission to post an amount into ledger

iv) Double posting or omission of posting

v) Posting wrong amount

vi) Error in balancing

  (b) Errors not disclosed by trial balance:

i) Error of principle

ii) Error of omission

iii) Errors of Commission

iv) Recording wrong amount in the books of original entry

v) Compensating errors.


Q.N.6. Describe briefly:                                                                                                                                                                               

                                (a) Errors of Commission (b) Errors of Omission  (c) Error of principle (d) Compensating Errors

Ans:  Errors of Commission: These are the errors which are committed due to the wrong posting of wrong transaction, wrong totaling or balancing of the accounts, wrong casting of the subsidiary books. Such errors are called Errors of Commission.

Errors of Omission: The errors of omission may be committed at the time of recording the transaction in the books of original entry or while posting to the ledger. These can be of two types:

                    i) errors of complete omission

                    ii) errors of partial commission

When a transaction is completely omitted from recording in the books of original record, it is an error of complete omission.

When a transaction is partially omitted from posting in ledger, it is an error of partial omission.

Error of principle: Accounting entries are recorded as per the generally accepted accounting principles. If any of these principles are violated or ignored, errors resulting from such violation are known as errors of principle. An error of principle may occur due to incorrect classification of expenditure or receipt between capital and revenue.

Compensating errors: When two or more errors are committed in such a way that the effect of these errors on the debits and credits of accounts is nil, such errors are called compensating errors. Such errors do not affect the tally of the trial balance.


Q.N.7. From the point of view of rectification, the errors can be classified into how many categories? How do we rectify them?                                                                                                                                                                                  

Ans: The errors may be classified into the following categories:

i) Errors which do not affect the trial balance (usually takes place in two accounts).

ii) Errors which affect the trial balance (usually affects one account and a journal entry is not possible).

 Errors which are committed in two or more accounts, also known as two sided errors, can be rectified by recording a journal entry giving the correct debit and credit to the concerned account.

Errors which are committed in one account, also known as one sided error, can be rectified by Opening a suspense account.


Q.N.8. What is Suspense Account?                                                                                                                                         

Ans: If the trial balance does not tally due to the existence of one sided errors accountant has to carry forward his accounting process prepare financial statements. The accountant tallies his trial balance by putting the difference on the shorter side as "suspense account”.


Q.N.9. What are the limitations of trial balance?                                                                                                             

Ans: The following are the important limitations of trial balances:

(i) The trail balance can be prepared only in those concerns where double entry system of book- keeping is adopted. This system is too costly.

(ii) A trail balance is not a conclusive proof of the arithmetical accuracy of the books of account. It the trail balance agrees, it does not mean that now there are absolutely no errors in books. On the other hand, some errors are not disclosed by the trail balance.

(iii) It the trail balance is wrong, the subsequent preparation of Trading, P&L Account and Balance Sheet will not reflect the true picture of the concern.


Q.N.10. Explain the rules of preparing the trial balance. Create a list of the items that are included under Debit and Credit side of Trial balance.                                                                                                                                     

Ans: While preparing the trial balance from the given list of ledger balances, following rules should be taken into care:

(i)      The balances of all assets account, expenses and losses account, drawings, cash and bank balances are placed in the debit column of the trial balance.

(ii)    The balances of all liabilities account, incomes and gains account and Capital balances are placed in the credit column of the trial balance.

 Specimen of Trial balances

Debit Account Items.


Credit Account Items.


Land and Building

Plant and Machinery


Furniture and Fixtures

Cash in Hand

Cash at Bank


Bills Receivable

Stock of Raw Materials

Work in Progress

Stock of Finished Goods

Prepaid Insurance


Carriage Inwards

Carriage Outwards

Sales Return

Interest Paid


Outstanding Interest Earned





Purchase Return

Commission / Discount Received

Long Term Loan

Bills Payable


Outstanding Salaries

Advances from Customers

Reserve Fund

Provision For Doubtful Debts





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