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Explain how trial balance is prepared by using the balances method
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.
The format to prepare a trial balance is as follows −
|Account number||Account title||Ledger folio||Balance|
- 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.
The advantages of trial balance are as follows −
- Financial accounts are easily prepared.
- Saves time.
- Minimizes labour cost.
- The only disadvantage is that it includes the undisclosed errors.
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