Dear Teachers,
These slides have been prepared based on the NCERT syllabus to support you in teaching Plus One and Plus Two Accountancy and Computerised Accounting.
Please review and verify the content before using it in your classrooms. If you find any errors or have feedback, please let me know.
Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.
✉️ mujeebchemmala@gmail.com
9995983075 �
Chapter 6
Trial Balance and Rectification of Errors
Process of Accounting
1. Identifying Financial Transactions
01/03/2021 Commenced business with a capital of Rs. 6,00,000.
02/03/2021 Rs. 4,50,000 deposited in a bank account.
Journal
Date
Particulars
LF
Debit Amt
Credit Amt
01/03/2021
Cash Account
6,00,000
6,00,000
To Capital Account
Dr.
(Commenced business with cash)
02/03/2021
Bank Account
4,50,000
4,50,000
To Cash Account
Dr.
(Deposited cash in a bank account)
10,50,000
10,50,000
Total
2. Recording in the Journal (Journalising)
Date
Amount
Date
Amount
Particulars
Particulars
Cash Account
01/03/20
Dr.
Cr.
J.F.
J.F.
Capital Account
50000
01/03/20
Bank Account
4000
02/03/20
Furniture Account
2000
04/03/20
Purchase Account
3000
15/03/20
Drawings Account
1000
30/03/20
Sunil Account
3400
3. Posting to the Ledger (Classifying)
Date
Amount
Date
Amount
Particulars
Particulars
Cash Account
01/03/20
Dr.
Cr.
J.F.
J.F.
Capital Account
50000
01/03/20
Bank Account
4000
02/03/20
Furniture Account
2000
04/03/20
Purchase Account
3000
15/03/20
Drawings Account
1000
30/03/20
Sunil Account
3400
53400
53400
43400
31/03/20
Balance c/d
43400
01/04/20
Balance b/d
53400
10000
Debit Balance
4. Balancing of Accounts
Date
Amount
Date
Amount
Particulars
Particulars
ABC Ltd. Account
Dr.
Cr.
J.F.
J.F.
04/03/20
Purchase Account
45000
20/03/20
Purchase Return A/c
2000
2000
45000
43000
01/04/20
Balance b/d
45000
45000
43000
31/03/20
Balance c/d
Credit Balance
4. Balancing of Accounts
Debit
Balance
Credit
Balance
Account Title
Trial Balance
Purchases
Sales
Capital
Furniture
Sundry Debtors
Sundry Creditors
Rent
Discount Allowed
Commission Rcvd
Salaries
79500
79500
5000
50000
22000
28000
3500
3200
600
500
1800
Cash
43400
1000
L.F
5. Preparing a Trial Balance
Meaning of Trial Balance
A trial balance is a statement prepared with debit and credit balances of all ledger accounts to verify the arithmetical accuracy of books.
Trial balance is an important statement in the accounting process as it shows the final position of all accounts and helps in preparing the final statements.
Methods of preparation of Trial Balance
1. Balances Method
2. Totals Method
3. Totals-cum-balances Method
1. Balances Method (Format)
Debit
Balance
Credit
Balance
Account Title
Trial Balance
Purchases
Sales
Capital
Furniture
Sundry Debtors
Sundry Creditors
Rent
Discount Allowed
Commission Rcvd
Salaries
79500
79500
5000
50000
22000
28000
3500
3200
600
500
1800
Cash
43400
1000
L.F
Date
Amount
Date
Amount
Particulars
Particulars
Cash Account
01/03/20
Dr.
Cr.
J.F.
J.F.
Capital Account
50000
01/03/20
Bank Account
4000
02/03/20
Furniture Account
2000
04/03/20
Purchase Account
3000
15/03/20
Drawings Account
1000
30/03/20
Sunil Account
3400
53400
53400
43400
31/03/20
Balance c/d
43400
01/04/20
Balance b/d
1. Balances Method
Debit
Balance
Credit
Balance
Account Title
Trial Balance
Purchases
Sales
Capital
Furniture
Sundry Debtors
Sundry Creditors
Rent
Discount Allowed
Commission Rcvd
Salaries
79500
79500
5000
50000
22000
28000
3500
3200
600
500
1800
Cash
43400
1000
L.F
1. Balances Method
Debit
Balance
Credit
Balance
Account Title
Trial Balance
Purchases
Sales
Capital
Furniture
Sundry Debtors
Sundry Creditors
Rent
Discount Allowed
Commission Rcvd
Salaries
79500
79500
5000
50000
22000
28000
3500
3200
600
500
1800
Cash
43400
1000
L.F
1. Balances Method
This is the most widely used method in practice. Under this method trial balance is prepared by showing the balances of all ledger accounts and then totalling up the debit and credit columns of the trial balance to assure their correctness.
Debit
Total
Credit
Total
Account Title
Trial Balance
Purchases
Sales
Capital
Furniture
Sundry Debtors
Sundry Creditors
Rent
Discount Allowed
Commission Rcvd
Salaries
97500
97500
5000
50000
22000
28000
3500
6200
600
500
1800
Cash
53400
6000
L.F
2. Totals Method (Format)
10000
5000
3000
Date
Amount
Date
Amount
Particulars
Particulars
Cash Account
01/04/20
Dr.
Cr.
J.F.
J.F.
Capital Account
50000
01/04/20
Bank Account
4000
02/04/20
Furniture Account
2000
04/04/20
Purchase Account
3000
15/04/20
Drawings Account
1000
30/04/20
Sunil Account
3400
53400
53400
43400
30/04/20
Balance c/d
43400
01/05/20
Balance b/d
53400
10000
2. Totals Method
Debit
Total
Credit
Total
Account Title
Trial Balance
Purchases
Sales
Capital
Furniture
Sundry Debtors
Sundry Creditors
Rent
Discount Allowed
Commission Rcvd
Salaries
97500
97500
5000
50000
22000
28000
3500
6200
600
500
1800
Cash
53400
6000
L.F
10000
5000
3000
2. Totals Method
Under this method, total of each side in the ledger (debit and credit) is ascertained separately and shown in the trial balance in the respective columns. The total of debit column of trial balance should agree with the total of credit column in the trial balance because the accounts are based on double entry system.
Debit
Total
Credit
Total
Account Title
Trial Balance
Purchases
Sales
Capital
Furniture
Sundry Debtors
Sundry Creditors
Rent
Discount Allowed
Commission Rcvd
Salaries
97500
97500
5000
50000
22000
28000
3500
6200
600
500
1800
Cash
53400
6000
L.F
10000
5000
3000
3. Totals-cum-balances Method (Format)
Debit
Balance
Credit
Balance
79500
79500
5000
50000
22000
28000
3500
3200
600
500
1800
43400
1000
3. Totals-cum-balances Method
This method is a combination of totals method and balances method. Under this method four columns for amount are prepared. Two columns for writing the debit and credit totals of various accounts and two columns for writing the debit and credit balances of these accounts.
Balances Method is the most widely used method in practice
Debit
Balance
Credit
Balance
Account Title
Trial Balance
Expenses
Liabilities
Assets
Income
Capital
XXX
XXX
XXX
XXX
XXX
XXX
XXX
L.F
Steps to prepare Trial Balance
01
02
03
04
List each account and place its balance in the debit
or credit column
Ascertain the balances of each account in ledger
Compute the total of debit balances column
Compute the total of the credit balances column.
05
Verify that the sum of the debit balances equal
the sum of credit balances
Objectives of preparing Trial Balance
01
To ascertain the arithmetical accuracy of the ledger
accounts.
The purpose of preparing a trial balance is to ascertain whether all debits and credit are properly recorded in the ledger or not and that all accounts have been correctly balanced.
Objectives of preparing Trial Balance
02
To help in locating errors
When a trial balance does not tally (that is, the totals of debit and credit columns are not equal), we know that at least one error has occurred.
The error may :
(1) totalling of subsidiary books
(2) posting of journal entries in the ledger
(3) calculating account balances
(4) carrying account balances to the trial balance
(5) totalling the trial balance columns.
Objectives of preparing Trial Balance
03
To help in the preparation of the financial statements.
(Profit & Loss account and Balance Sheet).
The task of preparing the statements is simplified because the accountant can take the balances of all accounts from the trial balance instead of going through the whole ledger.
Objectives of preparing Trial Balance
01
To ascertain the arithmetical accuracy of the ledger
accounts.
02
To help in locating errors
03
To help in the preparation of the financial statements.
(Profit & Loss account and Balance Sheet).
MUJEEB RAHIMAN C
HSST COMMERCE
GHSS PATTIKKAD
MALAPPURAM DT