Course
Code: PCO- 01
Assignment
Code: PCO-01/TMA/2017
Q4.
What is Trial Balance? How is it prepared? Explain.
Answer:
Trial Balance is a statement, prepared
with the debit and credit balances of ledger accounts to test the arithmetical accuracy
of the books. It may also
be prepared with debit and credit totals of ledger accounts and also with the
balances and totals of ledger accounts. Books of accounts are maintained
according to the Double entry system.
Before using the account balances to prepare
final accounts, an attempt is made to prove the total of accounts with debt
balances is in fact equal to the total of accounts with credit balances. This
proof of the equality of debt and credit balances is called a trail balance.
A trial balance is a five column schedule
listing the names and balances of all the accounts in the ledger and cash book,
listed in the order in which they appear in the ledger. Last two columns are
used for listing the balances of different accounts. The debt balances are
listed in the left-hand column and the credit balances in the right-hand
column.
The
total of two columns should agree. The different columns of the trial balance
are; i) serial number, ii) heads of account iii) ledger folio iv) debt balance
v) credit balance.
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