of only personal and real accounts. . Format The trial balance contains columns for debit balances and credit balances. The items are grouped as assets and liabilities.
. Stage It is prepared before the preparation of final accounts. It is prepared after preparing trial balance and trading and profit and loss account. .
Period It can be prepared periodically, say at the end of the month, quarterly, half yearly, etc. It is generally prepared at the end of the accounting period. . Order Balances shown in the trial balance need not be in order.
Balances shown in the balance sheet must be in order. . Compulsion Preparation of trial balance is not compulsory. Preparation of the balance sheet is compulsory in certain cases.
Tutorial note If a trial balance is not given in the question, trial balance has to be prepared first. If there is a difference in the trial balance, the difference is placed to ‘suspense account’ and shown in the balance sheet. Accountancy - Illustration From the following balances of Niruban, prepare balance sheet as on 31st December, . Dr.
` Cr. ` Plant and machinery Land and building Furniture Cash in hand Bank overdraft Debtors and Creditors , , , , , , , , , , , , , Bills receivable and Bills payable Closing stock Investments (short-term) Capital Drawings Net Profit , , , , , , , , , , , , , , , , Solution In the books of Niruban Balance sheet as on 31st December, Liabilities Assets Capital Add: Net profit Less: Drawings Creditors Bills payable Bank overdraft , , , , , , , , , , , , , , , Land and building Plant and machinery Furniture Investments (short-term) Stock in trade Debtors Bills receivable Cash in hand , , , , , , , , , , , , , , , , , , Illustration From the following trial balance of Sharan, prepare trading and profit and loss account for the year ending 31st December, and balance sheet as on that date. The closing stock on 31st December, was valued at ` , , . Debit Balances Credit Balances Stock ( - - ) Purchases Carriage inwards Wages