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Tally Solutions |Updated on: December 13, 2021
- Rules to prepare the Trial balance
- Steps to prepare Trial balance
- Specimen of Trial balance
- Example of Trial Balance
A trial balance is a conglomerate of or list of debit and credit balances extracted from various accounts in the ledger including cash and bank balances from cash book. The rule to prepare trial balance is that the total of the debit balances and credit balances extracted from the ledger must tally. Because every transaction has a dual effect with each debit having a corresponding credit and vice versa.
Therefore, at the end of the accounting period or at the end of each month, the balances of the ledger accounts are extracted, and trial balance is prepared to test as to if the total debits are equal to total credits or not.
Rules to prepare the Trial balance
The rule to prepare the Trial balance is an equation which is as follows:
| Debit | Credit |
|
Gains (Discount received, Return Outwards, Bad debts recovered, Profit and loss A/c (Cr) etc.) |
Steps to prepare Trial balance
The following are the steps to prepare Trial Balance.
| Step 1 | Cast/ Balance all the ledger accounts in the books. |
| Step 2 | List all the Debit balances on the debit side and sum them up. |
| Step 3 | List all the Credit balances on the credit side and sum them up. |
| Ideally, the Trial Balance should Tally at Step 3. | |
Specimen of Trial balance
| SI No | Particulars | L.F | Amount Rp DR | Amount Rp CR |
Example of Trial Balance
| Accounts | Debit | Credit |
| Cash | 1,02,280 | - |
| Accounts Receivable | 7,500 | - |
| Office Expenses | 2,500 | - |
| Prepaid Rent | 600 | - |
| Prepaid Insurance | 120 | - |
| Office furniture and equipment | 15,000 | - |
| Bank loan | - | 15,000 |
| Accounts Payable | - | 5,000 |
| Unearned Revenues | - | 7,500 |
| Capital | - | 1,00,000 |
| Drawings | 3,000 | - |
| Commission Revenue | - | 12,500 |
| Salary Expenses | 9,000 | - |
| Total | 1,40,000 | 1,40,000 |
Read More on Trial Balance
What is Trial Balance, How to Prepare Trial Balance, Methods to Prepare Trial Balance, Errors in Trial Balance
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