FINANCIAL

FINANCIAL ACCOUTING
ACCOUTING
PRESENTATION
PRESENTATION

ON
TRIAL BALANCE
 MEANING :-
Trial balance is a statement
prepared with the debit and credit
balance of the ledger accounts to
test the arithmetical accuracy of
the books.
 FEATURES OF TRIAL
BALANCE
1. . It is a list of balances of all ledger accounts
and cash books.
2. It is not a part of the double entry system of
book keeping. It is only a working paper.
3. It can be prepared on any date.
4. It verifies the arithmetical accuracy of posting
of entries from the journal to the ledger.
5. It is not a conclusive of proof of the accuracy
of the books of account since some errors are
not disclosed in trial balance for ex: errors
of principle
METHODS OF PREPARING
A TRIAL BALANCE
There are 2 methods of preparing a
trial balance :-
1. Balance method
2. Total method
 BALANCE METHOD
• In this method only debit and
credit balances are entered
separately in the two columns this
is known as net trial balance. This
is the most commonly used method
of preparing a trial balance
because it facilitates the
preparation of final accounts.
 TOTAL METHOD
In this, the total of each side of
the account is entered respectively
in the debit and credit columns of
the trial balance . Such a trial
balance is known as cross trial
balance .
 CAUSES OF
DISAGREEMENT OF
TRIAL BALANCE
 TYPES OF ERRORS
1. ERRORS AFFECTING TRIAL
BALANCE
2. ERRORS NOT AFFECTIN THE
TRIAL BALANCE
 ERRORS AFFECTING
TRIAL BALANCE
If a trial balance does not tally , it will
indicate that certain errors have been
committed which have affected the
trial balance
1. Wrong posting:-
if a total of cash book or other book is
wrong the trial will not tally.
For ex:- total of purchase book is
overcast by 1000
2. Posting to the wrong side:-
if instead of posting an amount on the
debit side of an account , it is posted
on the credit side the trial balance will
not tally.
3. Omission:-
Omission of posting an amount of a side
of a entry
For ex: 500 have been received from
ram correctly in the cash book but
omitted and to be posted to the credit
side of ram’s account
4. Double posting in a single
account:-
Ex: 500 have been received from r
correctly in cash book but posted twice
in the credit side of R ’s account.
5. Errors of totaling:-
Errors may occur in the totaling of debit
side or credit side of account in the
ledger.
ERRORS NOT AFFECTING
TRIAL BALANCE
• Errors of omission:-
If a transaction unrecorded either in the journal
it will be treated as error of omission , such
an error will not affect the trial balance.
• Error of commission:-
If wrong amount is entered in the journal or
subsidiary books the trial balance will tally
because the same amount will be posted in both
account affected by transaction.
• Compensating error:-
If the effect of one error is different
by the effect of some other error
such errors are called compensating
errors.
For ex : posting on the debit side of
A’s account 50 instead of posting 500
and while posting on the debit S
account 500 are posted of 50.
• Error of principle :-
The errors are committed in those cases
where a proper differences between
capital and revenue item is not made
For ex : 1 when a capital expensive is
treated as revenue expense
2 when a revenue expense is
treated as capital expense
Amount spent on the repair of old machinery
debited machinery account.
PRESENTED BY:-
SAKSHI GUPTA