TRIAL BALANCE
I) Trail Balance – Trail balance is the list of debit and credit balances, taken
out from ledger. It also includes the balances of cash and bank taken from cash book.
According William Pickles,” The statement prepared with the help of ledger balance at the end of financial year (or it any other date) to find out whether debit total agrees with credit total is called Trail Balance”
Needs for preparing Trail Balance
a) To ascertain the arithmetical accuracy of the ledger accounts – The trail balance provides a useful check upon the ledger postings. If a trail balance tallies, it is proved that the posting to the ledger account is correct.
b) To help in the detection or location of errors – If a trail balance does not tally it indicates that some errors have occurred and the accountant will them proceed to locate such errors.
c) For the preparation of Final accounts – As the trail balance contains the list of all the ledger accounts, it provides a basis for further processing of accounting data, i.e., preparation of final accounts namely Trading and Profit & Loss Accounts and a Balance Sheet.
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