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Form One Notes

The document discusses the trial balance, which is a statement that lists debit and credit balances of accounts extracted from ledgers. At the end of an accounting period, the totals on both sides must be equal to check the arithmetic accuracy of double-entry bookkeeping. A trial balance helps detect errors, ensure proper balance calculation, and prepare financial statements, though it cannot prove all transactions were recorded or prevent repeated postings. The document outlines how accounts are classified in the debit or credit column when preparing a trial balance based on balance type or total, and provides an example trial balance format.

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Salim Abdulrahim Bafadhil
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4K views2 pages

Form One Notes

The document discusses the trial balance, which is a statement that lists debit and credit balances of accounts extracted from ledgers. At the end of an accounting period, the totals on both sides must be equal to check the arithmetic accuracy of double-entry bookkeeping. A trial balance helps detect errors, ensure proper balance calculation, and prepare financial statements, though it cannot prove all transactions were recorded or prevent repeated postings. The document outlines how accounts are classified in the debit or credit column when preparing a trial balance based on balance type or total, and provides an example trial balance format.

Uploaded by

Salim Abdulrahim Bafadhil
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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TRIAL BALANCE

Definition; trial balance is a statement which show the list of debit and credit balance of
accounts extracted from the ledgers.
Normally the statement prepared at the end of accounting period, the total must be equal
both sides.
NEED FOR A TRIAL BALANCE
The aim of the trial balance is to check the arithmetical accuracy of double entry of the
business transactions in a given period.
ADVANTAGES OF A TRIAL BALANCE
1. It helps to check the arithmetical accuracy of double entry.
2. It helps to get summary for the preparation of financial statement.
3. Agreement of trial balance total proves that a balance of each ledger account has
been calculated correctly, otherwise the trial balance could not agree.
4. It helps to detect some book keeping errors.
DISADVANTAGES OF TRIAL BALANCE
1. Some errors cannot be detected by trial balance.
2. It does not prove that all transactions have been recorded.
3. It cannot protect the repeated postings.
PREPARATION OF A TRIAL BALANCE
(a) By means of balances
We look for the balance b/d shown on which side of the account;
 If balance b/d shown on the debit side that account recorded on the debit
column of the t/balance.
 If balance b/d shown on the credit side that account recorded on the credit
column of the t/balance.

(b) By means of total


Key points used in preparation of a trial balance;
(i) All assets (both non current and current assets) are recorded on the debit
column. Eg: furniture, premises, motor vehicle, cash, bank, debtors, stock etc.
(ii) All expenses are recorded on the debit column. Eg purchases, wages, drawings
etc
(iii) Capital s recorded on the credit column.
(iv) All incomes are recorded on the credit column. Eg; sales, discount received etc
(v) All liabilities (non current and current liabilities) are recorded on the credit
column, eg; loan from bank, creditors, bank over draft etc
(vi) Closing stock is not recorded in the trial balance.
FORMAT OF A TRIAL BALANCE
PROPRIATOR’S NAME
TRIAL BALANCE AS AT --------------
NAME OF ACCOUNT DEBIT CREDIT
Capital XXX
Drawings XXX
Furniture XXX
Machinery XXX
Motor vehicles XXX
Land XXX
Building XXX
Bank loan XXX
Creditors XXX
Bank XXX
Cash XXX
Debtors XXX
Rent XXX
Rates XXX
Wages XXX
Salaries XXX
Electricity XXX
Sales XXX
Purchases XXX
Return in ward XXX
Return outwards XXX
Carriage in wards XXX
Carriage out wards XXX
Rent received XXX
Interest XXX
Discount allowed XXX
Discount received XXX
Opening stock XXX
TOTAL XXXXX XXXXX
Closing stock XXX
(a) By means of balances
Example; please refer;
FUNDAMENTAL OF BOOK KEEPING, FORM ONE, PAGE 95 Example 1.

Prepared by;
Md. Mzumila, Z.

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