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# TRIAL BALANCE

MEANING OF A TRIAL BALANCE

A trial balance is a list of debit and credit balances extracted from the ledger. The trial balance shows the arithmetical accuracy of ledger entries. Double entry book keeping requires that the totals of the debit column and that of the credit column of the trial balance agree.

Where the two sides of a trial balance do not agree, this suggests the presence of one or more errors in the ledger. However, the agreement of a trial balance does not necessarily mean that the accounts are without error as there are some errors that can occur but would not affect the agreement of a trial balance.

USES OF A TRIAL BALANCE

1. The trial balance is used to show the arithmetical accuracy of postings made in the ledger
2. The trial balance shows the summarized form of the balances of accounts in the general ledger at a glance
3. It helps in the preparation of trading account, profit and loss account and the balance sheet.

FORMAT OF A TRIAL BALANCE

Lucy Enterprises

Trial Balance As At 31st December, 2002

Particulars                                    Folio                                 DR                       CR

—————————————————————————————————————–

N                   N

ILLUSTRATION 1

Prepare a trial balance from the following accounts:

Creditors. N2784, bank overdraft N1980 and Purchases N4764

SOLUTION

TRIAL BALANCE AS AT …………………..

DR                        CR

N                            N

Creditors —————————-                                           2784

Bank Overdraft———————–                                         1980

Purchases —————————–        4764

——-                      ——–

4764                         4764

=====                   =====

ILLUSTRATION 2

Prepare a trial balance from the ledger account balances:

Capital N1,000, Creditors  N100, Purchases N4764, Sales N5194,

Stocks    N480, Debtors N100 and Cash N950

SOLUTION

TRIAL BALANCE AS AT ………………….

DR                  CR

N                    N

Capital——————————–                                                                 1000

Creditor—————————————                                                     100

Sales —————————————                                                          5194

Purchases ——————————–                                  4764

Stocks——————————–                                         480

Debtors ———————————–                                  100

Cash in hand —————————–                                 950

——-                 ——–

6294                  6294

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