METHOD OF PREPARATION OF TRIAL BALANCE



Preparation of Trial Balance is the third step in accounting process. It is preceded by recording of transaction in subsidiary nooks and posting of the accounts in the ledger, and succeeded by preparation of final accounts.

A Trial Balance can be prepared at ant time as and when desired, but it must be prepared at the end of each financial year after the accounts have been closed. There are three methods of preparing the Trial balance.


1.      TOTAL METHOD:-Under this method, every ledger account is totaled and that total amount (both of debit side and credit side) is transferred to trial balance. In this method, trial balance can be prepared as soon as ledger account is totaled. Time taken to balance the ledger accounts is saved under this method as balance can be found out in the trial balance itself. The difference of totals of each ledger account is the balance of that particular account. This method is no commonly used as it cannot help in the preparation of the financial statements.

2.      BALANCE METHOD:- Under this method every ledger account is balanced and those balances only are carry forward to the trial balance. This method is used commonly by the accountants and helps in the preparation of the financial statements. Financial statements are prepared on the basis of the balance of the ledger accounts.

3.      TOTAL AND BALANCE METHOD:- Under this method, the above two explained methods are combined. Under this method statement of trial balance contains seven columns instead of five columns. This has been explained with the help of the following example:
S.No.
Heads of Account
Debit Total
Credit Total







1.
Cash Account
30000
19800
2.
Furniture Account
3000

3.
Salaries Account
2500

4.
Shyam’s Account
21500
25000
5.
Purchase Account
26000

6.
Purchase Return Account

500
7.
Ram’s Account
30000
25100
8.
Sales Account

30500
9.
Sale Return Account
100

10.
Capital Account
500
1000
11.
Bank Account
5000
8200

TOTAL



119100
191100








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