This blog is written to help you out with Trial balance homework answer. So go through the blog to understand better and complete your homework easily and efficiently.
What is trial balance?
A trial balance is a statement that shows either the balance, if Balance Method is used or the total amount of debit and credit items of all the accounts appearing in Ledger, if the Total Method if used. It also shows the cash and bank balances.It is composed one the Journal entries have been posted into balancing the account and the Ledger.
One of the most important things that need to be followed while doing Trial balance homework answer is that the balance of an account is the difference between the overall of the debit side and the credit side. If it is found that the whole of the debit side is greater that the complete of the credit side, it is known as Debit balance. On the other hand, if the credit total is more than that of the debit total then it is a Credit balance
What are the main characters of Trial balance?
The few main characters of trial balance that would help you to solve Trial balance homework answers are:
- Trial balance is a list of the entire Ledger balances and cash book.
- It is not a part of double entry system of book keeping. It is only a working paper.
- Trial balance can be prepared on any date.
- Trial balance can be used to verify arithmetical accuracy related to posting entries. This is mainly done in Ledger from the Journal.
It cannot be deemed as a conclusive proof of the precision related to books of accounts. This is because in Trial balance some errors are not highlighted. An example for this can beer or of principle.
What are the objectives of preparing Trial balance?
Now this is of great importance to any business organization. While doing Trial balance homework answer, one needs to understand the basic function of trial balance.
- Used to determine arithmetical accuracy of a Ledger Posting- The main importance of trial balance is that it helps in ascertaining the accuracy of the postings and other accounting processes whether have been carried out properly or not.
- Summarize each and every account- trial balance offers a compact version of Ledger. The ledger may have to refer to only when more details are required in respect of an account.
- To assist in preparing the Final account- The final accounts are prepared on the basis of the information that is obtained from the preparation of trial balance.
- To assist in locating error if any- trial balance helps in locating error in books of accounts. It should, however be noted that it doesn’t disclose all the mistakes in books of accounts.
What are the limitations related to trial balance?
There are certain limitations related to trial balance. The limitations are:
- Error of principles- It means that incorrect applications of the principle of accounts are not divulged by Trial Balance in this case.
- Compensating errors- There are group of certain errors which nullify each other. They are synchronized in a particular way that the mistakes compensate each other.
- It is difficult to detect the omitted details of transactions those were recorded in the accounts book.
- Wrong amounts recorded in books of original entry and same amount is debited and credited is not brought out by Trial balance
- Recording both the aspects of transactions which are twice in books of accounts.
- Posting of precise amount on the exact section but in incorrect account will not be reflected through Trial balance.
Different methods of preparing trial balance
There are two ways in which one can make trial balance, namely the Balance Method and Total Method.
- In the balance method the debit or the credit balance of all the accounts are entered separately into two columns. This is also known as the Net trial balance. It is commonly used method of composing Trial Balance because it facilitates the preparation of the final account. It may be noted that Trial Balance which is made by this method can be prepared only when the Ledger account have been balanced.
- Total method is used when the total of each side of the account enters in the debit and the credit column of Trial balance. It is also known as the Gross Trial balance.
It is important to keep certain points in mind while completing Trial Balance homework answer.
- Trial balance is composed on the specific date. It should be inscribed on top of Trial balance.
- In the 1st column, the Head of the Account is noted here
- In the 2nd column of Trial Balance the Ledger Folio, page number and other related things are written.
- In the 3rd column, aggregate of credit and the debit section is written.
- 2columns are totaled at the very end.
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