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<p align="justify">Trial balance is a statement of debit and credit balances extracted from the ledger, with a view to test the arithmetical accuracy of the books. One of the basic principles of double-entry is that for every debit there must be a corresponding credit. Therefore the equality of debits and credits posted in ledger should be verified at the end of each accounting period. If the debit and credit sides of trail balance are equal then it indicates that the books are arithmetically accurate and both the aspects of each transaction are recorded. </p>
<p align="justify">&#160;</p>
<h3>Steps in Preparing Trial Balance</h3>
<p> &#160;</p>
<ul>
<li>Find out the closing balance of each ledger account. </li>
</ul>
<p> &#160;</p>
<ul>
<li>
<div align="justify">If the ledger account shows debit balance, then take this debit balance to the debit column&#160;&#160; of trial balance. Whereas, if the ledger account has credit balance then transfer this balance to the credit column of trial balance. </div>
</li>
</ul>
<p> &#160;</p>
<ul>
<li>Add total amounts in each column. </li>
</ul>
<p> &#160;</p>
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<ul>
<li>Compare the totals of each column. </li>
</ul>
<p> &#160;</p>
<p> <strong>Fore Example:</strong> Robert purchased goods on credit for $4000.</p>
<p> &#160;</p>
<p> Now the journal entry will be:</p>
<p>Purchases&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 4000<br />
&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; A/C Payable&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 4000 </p>
<p> &#160;</p>
<p> Similarly Ledger account will be:</p>
<p> &#160;</p>
<p align="left"><strong>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Purchases Account</strong></p>
<p> <a href="http://mba-lectures.com/wp-content/uploads/2010/07/image27.png"><img title="image" style="border-top-width: 0px; display: inline; border-left-width: 0px; border-bottom-width: 0px; margin-left: 0px; margin-right: 0px; border-right-width: 0px" height="105" alt="image" src="http://mba-lectures.com/wp-content/uploads/2010/07/image_thumb27.png" width="450" align="left" border="0" /></a> </p>
<p> &#160;</p>
<p> &#160;</p>
<p> &#160;</p>
<p> &#160;</p>
<p> <strong></strong></p>
<p> <strong>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; A/C Payable</strong>
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View Comments
well done ?
in trial balance sheet,the balnces are not equal...why???
Where is the $10,000 paid cash for the truck?