Explain how trial balance is prepared by using the balances method

Banking & FinanceFinance ManagementGrowth & Empowerment

This is the most commonly used method for preparing a trial balance. In this method, closing balances are tabulated in two separate statements. All the credit balances are recorded in the credit column and all the debit balances are recorded in the debit column. Both balances are then tallied.

Format

The format to prepare a trial balance is as follows −

Title      
DD/MM/YYYY
Account numberAccount titleLedger folioBalance
debitCredit
     
     
Total  

Here,

  • Title − Name of the company.
  • DD/MM/YYYY − Trial balance prepared Date, Month and Year.
  • Sl. No − Ledger account number (serial numbers).
  • Name of account − Full account name of ledger account.
  • Ledger folio − Page number of ledger balance of accounts.
  • Debit − Debit balance.
  • Credit − Credit balance.

Advantages

  • The advantages of trial balance are as follows  −

  • Financial accounts are easily prepared.
  • Saves time.
  • Minimizes labour cost.

Disadvantage

  • The only disadvantage is that it includes the undisclosed errors.
raja
Published on 09-Jul-2021 13:52:58
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