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Trial Balance
Commerce Trial Balance

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What is Trial Balance?

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A trial balance is regarded as a

bookkeeping worksheet where the
balance of all  ledgers is grouped together
into debit and credit account column total
equally. Preparation of trial balance for
the company is done periodically,
generally at the end of every reporting
period, when the managers are required
to report the company’s data to the top
executives. The prior purpose of
producing the trial balance is to be sure
that the entries in a company's
bookkeeping system are valid
mathematically.

In our further section, we will talk more

about the concept of Trial Balance. 

Trial Balance Format 

The Trial Balance has a simple format that

is to be designed. Below is the design of
the simple format. 

Folio Debit Credit

Land 
Furniture  1,00,000
Machinery 600
Inventory 560
Debtors  6000
Bank  0
Capital 4600
Loan 48000
Creditors 80,000
Sales 5676
Sales 4817
Returns
Cost of
Goods Sold
590
Advertising
13067
Membership
Fees 6576

Water and 340

Electricity 1200
Telephone 900
Salaries and 2800
Wages
1260
Interest
Paid

138493 138493

Trial Balance Accounting

Trial balance for a company serves to

detect any types of mathematical errors
which might have occurred in the double-
entry system of accounting. If the debit
column is equal to the total of the credit
column, the trial balance is then
considered to be balanced, and there
should be 0 mathematical errors in the
ledgers. This of course does not mean that
there are no errors in a company's
accounting system as transactions which
are classi"ed improperly or those which
are simply missing from the system is still
an accounting error. This type of error
cannot be detected by the trial balance
procedure.

How to Prepare a Trial Balance 

To prepare a trial balance, we require the

closing balances of all the respective
general ledger accounts. The trial balance
is drafted after posting all the "nancial
transactions which are required to be
posted to the journals and summarizing
them on the ledger statements. The trial
balance is formatted to ensure that the
debit’s balance is equal to the credit’s
balance.

1. To start o# with preparing the trial

balance, this is to be made sure that
we need every ledger account to be
balanced, the balance amount is to
be chalked out to include in the trial
balance.

2. After this, prepare an eight-column

worksheet, in which column headers
should assign the account number,
account name and the aligned
columns for debit and credit
balances.

3. For every ledger account, the

balance is to be transferred to the
trial balance worksheet, the account
number and the account name
along with the account balance in
the appropriate debit or to the
credit column.

4. Then add up the amounts of the

debit column and the credit column.
Generally, the totals should be the
same in an error-free trial balance. 

5. If there is a di#erence in balance,

accountants need to locate and
rectify the errors made.

Objectives of Trial Balance

The purpose of a trial balance is made to

ensure that the journal entries made into
the organization's ledger are tallied
properly.  A trial balance lists the ending
amount of the balance in each general
ledger account.  The total amount of all
the debits and credits in an accounting
entry are required to be matched by the
balances. If it does not then it means one
or more transactions were recorded in the
general ledger, that was left unbalanced.

In the manual record-keeping system, the

trial balance is used to create the "nancial
statements, which means that the account
balances in the trial balance are manually
averaged out and are found in the
"nancial statements.

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FAQs on Trial Balance

1. What are Ledgers?

An  accounting ledger  is a type of account  or the
record which is used to store the bookkeeping
entries for the balance-sheet and for income-
statement transactions. The ledgers in the
balance sheet include the asset  ledgers  like the
cash or  accounts  receivable. The Income
statement  ledgers  here include  the ledgers  like
the revenue and the expenses.
A  ledger  is a book which contains the accounts
where the classi"ed and summarized information
from the journals is posted as the debits and
credits. The ledger here contains the information
which is required to prepare the "nancial
statements. This includes the accounts for the
assets, liabilities, owners' equity, revenues and
expenses.

2. What is the Double-Entry System of

Accounting?

3. Give examples of errors in the Trial

Balance.

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