Prepared by Sir Law

Notes on Trial Balance

A Trial Balance is a statement showing a list of debit and credit balances extracted from the accounts in the ledger. It is
used to check the equality of the debits and credits.

Uses of the trial balance

1) To check the mathematical accuracy of the entries made in the accounts and whether they adhere to the double entry
system.

2) To make it easier to prepare the financial statements.

3) To locate errors.

Limitations of Trial balance

The following errors cannot be detected by the trial Balance:

1. Errors of omission

2. Errors of principle

3. Errors of original entry

4. Errors of commission

5. Errors of compensation

5. Errors of reversal entry

Format of a trial balance

Names of Accounts debit credit

Assets xxx
Liabilities Xxx
Income Xxx
Capital Xxx
Expenditure Xxx
Returns inwards Xxx
Returns outwards xxx
Drawings xxx