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    Trial Balance

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    Lefulesele Masia
    A trial balance is prepared using ledger and cash book balances to test the arithmetical accuracy of accounting books. It lists debit and credit balances of ledger accounts. Accounts with debit balances are listed on the debit side and accounts with credit balances on the credit side. Preparation of a trading account is the first step in final accounts to calculate gross profit or loss during a period. It shows the difference between sales and cost of goods sold including opening stock, purchases, direct expenses and closing stock.

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    Trial Balance

    Uploaded by

    Lefulesele Masia
    20 views6 pages
    A trial balance is prepared using ledger and cash book balances to test the arithmetical accuracy of accounting books. It lists debit and credit balances of ledger accounts. Accounts with debit balances are listed on the debit side and accounts with credit balances on the credit side. Preparation of a trading account is the first step in final accounts to calculate gross profit or loss during a period. It shows the difference between sales and cost of goods sold including opening stock, purchases, direct expenses and closing stock.

    Original Description:

    The document shows the procedure on the preparation of a trial balance

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    A trial balance is prepared using ledger and cash book balances to test the arithmetical accuracy of accounting books. It lists debit and credit balances of ledger accounts. Accounts with debit balances are listed on the debit side and accounts with credit balances on the credit side. Preparation of a trading account is the first step in final accounts to calculate gross profit or loss during a period. It shows the difference between sales and cost of goods sold including opening stock, purchases, direct expenses and closing stock.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    20 views6 pages

    Trial Balance

    Uploaded by

    Lefulesele Masia
    A trial balance is prepared using ledger and cash book balances to test the arithmetical accuracy of accounting books. It lists debit and credit balances of ledger accounts. Accounts with debit balances are listed on the debit side and accounts with credit balances on the credit side. Preparation of a trading account is the first step in final accounts to calculate gross profit or loss during a period. It shows the difference between sales and cost of goods sold including opening stock, purchases, direct expenses and closing stock.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
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    TRIAL BALANCE

    Trial balance is a statement prepared with Debit and credit balances of the ledger account to test the arithmetical accuracy of the books.
    FORMAT OF A TRIAL BALANCE

    Trial Balance as on (DATE)


    Head of Account L.F. Amount Dr. Amount Cr.
    (Rs.) (Rs.)

    ITEMS RELATED WITH THE PREPARATION OF TRIAL BALANCE


    1 . A trial balance is prepared with the help of ledger and cash books.
    2 . Ledger account showing debit balance are shown on debit column of a trial balance and ledger account showing credit balances are
    shown on credit column.
    3 . Purchase a/c always shows a debit balance which is shown in debit column of a trial balance . Purchase return always shows credit
    balance , so it is shown in the debit side of trial balance .
    4 . Sales a/c always shows a credit balance so it is shown in credit side of a trial balance while sales returns is shown in debit side of
    a trial balance .
    5 . Opening stock a/c always shows a debit balance so it is shown on the debit side of trial balance .
    6 . Generally closing stock(inventory ) does not appear in the trial balance , it is usually given as an additional information or
    adjustment outside the trial balance .
    7 . Account of assets , drawings , debtors , expenses and losses shows debit balances , so they are shown on debit side of trial balance.
    8 . Accounts of income and gains , liabilities , capital , creditors show credit balances so they are shown on credit side of trial balance .

    TRADING ACCOUNTS / FINAL ACCOUNTS

    Preparation of the trading account is the first stage in the process of preparing the final accounts . Trading account is prepared to
    calculate gross profit or gross loss during an accounting year . Gross profit or loss is the difference between sales and cost of goods
    sold . If the amount of sales exceeds the goods sold , gross profit is earned conversely gross loss is incurred . For calculating cost of
    goods sold , opening stock , purchase , direct expenses on purchasing , manufacturing goods , closing stock are considered .
    FORMAT OF TRADING ACCOUNT

    Trading a/c of Ms. (company owner ) as on (Date)

    Particulars Amount Particulars Amount


    in Rs. in Rs.
    To opening stock By sales
    Less sales return / return inward
    To Purchase By closing stock
    Less Purchase return / return outward
    To direct expenses By gross loss transferred to profit / loss
    a/c
    To wages and salaries
    To freight , freight inward
    To carriage , carriage inward

    To octroiduty
    To factory power and fuel
    To factory lightening
    To factory rent
    To factory
    From insurance
    the following balances , prepare trading a/c for year ended 31 March , 2022
    To duty
    Stock on 2021
    on 1 April purchase royalities 10,000
    Wages 5,000
    To consumable stores
    Sales 1,55,000
    Return outward 8,000
    To gross profit transferred to Profit and
    Freight 500
    Purchase
    loss a/c 1,00,000
    Carriage inward 1,000
    Return inward 5,000
    Octroiduty 2,500
    Closing stock as on 31 March 2021 was valued at 20,000
    Particulars Amount Particulars Amount
    in Rs. in Rs.
    To opening stock 10,000 By sales 1,50,000
    1,55,000
    Less sales return 5,000

    To purchase 92,000 By closing stock 20,000


    1,00,000
    Less purchase return
    8,000
    Gross profit transferred to credit side of profit and loss a/c and gross loss transferred to debit side of loss / profit a/c . Net profit and net loss
    To wages
    obtained 5,000 in the capital a/c of balance sheet.
    in profit and loss a/c will be added and subtracted

    To freight 500

    To carriage inward 1,000


    To Gross Profit transferred to P/L a/c 1,70,000 1,70,000
    To octroiduty 2,500
    Gross profit transferred to credit side of profit and loss a/c and gross loss transferred to debit side of loss/ profit a/c . Net profit and net loss
    obtained in profit and loss a/c will be added and subtracted in the capital a/c of balance sheet.

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