.

Saturday, March 9, 2019

Trial balance

What is a examination rest? State its objectives and characteristics. Give some reasons for disagreement of the Trial Balance. A Trial Balance is a list of exclusively the General ledger accounts (both revenue and capital) contained in the ledger of a business. This list will contain the name of the noun phrase ledger account and the value of that tokenish ledger account. The value of the nominal ledger will hold either a debit ratio value or a conviction commensurateness value.The debit balance values will be listed in the debit column of the mental test balance and the redit value balance will be listed in the mention column. The earnings and loss statement and balance sheet and other fiscal reports can then be produced using the ledger accounts listed on the run balance. The following are the important objectives of trial balance 1. To Check The arithmetic Accuracy Trial balance is based on the double-entry principle of debit equals realisation or credit equals debit . As a result, the debit and credit columns of trial balance must always be equal.If they do, it is assumed that the recordings of fiscal transactions are ccurate. Conversely, if they do not, it is assumed that they are not arithmeticly accurate. Therefore, one important purpose of preparing trial balance is to provide a check on the arithmetical accuracy of the recordings of the financial transactions. 2. To Help put Accounting Errors Since the trial balance indicates if there is any error committed in the Journal and the ledger, it helps the accountant to locate the error because the starting orchestrate of locating errors is trial balance itself. 3.To Summarize the Financial Transactions A business performs several numbers of financial transactions during a certain period of time. The transactions themselves cannot portray any picture of the financial personal business of the business. For that purpose, a summary of the transactions has to be drawn. The trial balance is li vely with a view to summarize all the financial transactions of the business. 4. To fork up the Basis for Preparing Final Accounts Final accounts are prepared to show profit and loss and the financial position of the business at the end of an score period.These accounts are prepared by using the debit and credit of all ledger accounts. Therefore, since the trial balance is a statement of the debit and credit balances of the ledger accounts, it provides the basis for the preparation of the final accounts. Characteristics of Trial Balance 1. It is a list of balances of all Ledger accounts and Cash Book 2. It is not a part of the double entry system of book-keeping. It is only a workings paper. 3. It can be prepared on any date 4. It verifies the arithmetical accuracy of posting of entries from the Journal to the Ledger. 5.

No comments:

Post a Comment