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C H A P T E R

Trial Balance

MEANING OF KEY TERMS USED IN THE CHAPTER

1. Trial Balance It is a statement prepared with the debit and credit balances of
the ledger accounts. The total of debit and credit columns should
be equal. Specimen of a Trial Balance (with imaginary amounts) is as
follows:
TRIAL BALANCE
as on ...
Heads of Accounts L.F. Debit Balance Credit Balance
` `
Capital A/c ... 80,000
Cash A/c 47,700 ...
Purchases A/c 79,000 ...
Sales A/c ... 50,000
Drawings A/c 1,500 ...
Discount Received A/c ... 200
Salaries A/c 2,000 ...
Total 1,30,200 1,30,200
2. Suspense Account Suspense Account is an account in which the difference in the Trial Balance
is transferred temporarily.

CHAPTER SUMMARY

• Trial Balance is a statement which shows the heads and balances of all the accounts appearing in the
Ledger and the Cash Book of an enterprise at any given date. It is not an account. It is prepared on a specific
date by taking the balances of various accounts as on that date. It may be prepared either by taking the
balance of each account or the total amounts of debit and credit items.

• The agreement of Trial Balance ensures arithmetical accuracy and not accounting accuracy.
• Functions of a Trial Balance are to:
(i) ascertain arithmetical accuracy of Ledger Accounts.
(ii) provide summary of each Ledger Account.

(iii) facilitate preparation of financial statements.
(iv) help in locating errors.