Trial Balance: Rules, Uses and Nature Of Trial Balance

Trial balance can be defined as the schedule or list that shows the debit and credit balances which are extracted from the ledgers, to show the arithmetical accuracy of the ledgers. The technique ensures that the debit and credit balances as displaced in the ledger are compiled. The objective of trial balance is to prove the accuracy of the book-keeping All the ledger accounts must be balanced off and entered in the trial balance.

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Accountants use a trial balance to test the equality of their debits and credits. A trial balance is a listing of the ledger accounts and their debit or credit balances to determine that debits equal credits in the recording process. Preparing and adjusting trial balances aid in the preparation of accurate financial statements. Although you can prepare a trial balance at any time, you would typically prepare a trial balance before preparing the financial statements.

The following are the uses of trial balance

RULES OF TRIAL BALANCE

• All assets must be put on the debit side
• All liabilities must be put on the credit side
• All income or gain must be recorded on the credit side
• All expenses must be recorded on the debit side

The format of the trial balance is given below. It has columns for Particular, debit or credit sides. Because of the principle adopted, it must be balanced.    

Follow this format in solving any problem you have on Trial balance and you will get an accurate result. Use the comment section for your suggestions.

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