Methods of preparing trial balance A trial balance can be prepared in the following methods: (i) Balance method In this method, the balance of every ledger account either debit or credit, as the case may be, is recorded in the trial balance against the respective accounts. The balance method is widely used, as it helps in the preparation of financial statements. (ii) Total method Under this method, the total amounts on the debit side of the ledger accounts and the total amounts on the credit side of the ledger accounts are ascertained and recorded in the trial balance. This method is not commonly used as it cannot help in the preparation of financial statements.
(iii) Total and Balance method This method is a combination of both total method and balance method. Under this method, four columns are provided, namely, (a) totals of debit side of the ledger accounts, (b) totals of the credit side of the ledger accounts (c) debit balances of ledger accounts and (d) credit balances of the ledger accounts. This method is not in practice. .
. Balance method Following are the steps to be followed to prepare trial balance under this method: Step : Calculate the balances of all ledger accounts including the cash book. Step : Record the names of the accounts in the particulars column and the amounts of debit balances in the debit column and credit balances in the credit column. Step : Enter the page number of ledger from which the balance is taken in the Ledger Folio column.
Step : Total the debit and credit columns. It must be equal. If not equal, locate the errors and make the trial balance agree. Trial balance is prepared in the following format under the balance method: Trial balance as on … S.
No. Name of account / Particulars L.F. Debit balance ` Credit balance ` Accountancy - Specimen of a trial balance Trial balance of as on S.No. L.F.
Debit ` Credit ` Cash in hand Cash at bank Bills receivable Sundry