Preparation of Trial Balance

According to the double entry system, every debit has a corresponding credit. All the debit balances are equal to credit balances. If they don’t agree, it is understood that some mistakes are committed somewhere. A Trial Balance is a statement in which debit and credit balances of all ledger accounts are shown to list the arithmetical accuracy of the books of accounts.

Features of Trial Balance

• It is not an account.

• It contains debit and credit balances of accounts.

• It helps in the preparation of final accounts.

• Both debit and credit sides of a trial balance are always equal.

Format of the Trial Balance

Format of the Trial Balance 31st December 202X
Particulars	Debit Amount	Particulars	Credit Amount
Balances of all assets, Expenses, Losses	xxxx	Balances of all liabilities, Incomes, Gains, Reserves	xxxx

Debit Balance	Rs	Credit Balance	Rs
Debtors	xxxx	Creditors	xxxx
All assets	xxxx	All liabilities	xxxx
All expenses	xxxx	All incomes and gains	xxxx
All losses	xxxx	Profits account	xxxx
Purchases	xxxx	Loan account	xxxx
Sales returns	xxxx	Bank over draft	xxxx
Drawings	xxxx	Sales	xxxx
Stock	xxxx	Purchase returns	xxxx
Bills receivables	xxxx	Provision for doubtful debts	xxxx
Prepaid expenses	xxxx	Provision for discount on debtors	xxxx
Incomes receivables	xxxx	All reserves and surpluses	xxxx
All intangible assets	xxxx	Bills payables	xxxx
		Outstanding expenses	xxxx
		Incomes received in advance	xxxx
		Capital	xxxx
	xxxx		xxxx

Example:- Make a trial balance from the below balances of accounts.

Particulars	Rs	Particulars	Rs
Capital	100000	Machinery	30000
Stock	16000	Wages	50000
Carriage inward	500	Salaries	5000
Factory rent	2400	Repairs	400
Fuel and power	2500	Buildings	40000
Sundry debtors	20000	Sales	203600
Purchases	122000	Creditors	12500
Returns outwards	2000	Returns inwards	3600
Drawings	2000	Discount allowed	750
Discount received	250	Office expenses	1000
Manufacturing expenses	600	Bills payable	3000
Bills receivable	5000	Cash in hand	2400
Cash at bank	15400	Office rent	1800