Basics of Trial balance

Trial Balance
Complete Notes and Problem-Solving Guide

1. Meaning of Trial Balance
A Trial Balance is a statement containing the debit and credit balances of all ledger accounts on a particular date.
Its basic objective is to check whether Total Debit Balances = Total Credit Balances.

2. Accounting Sequence
The accounting flow is: Journal → Ledger → Trial Balance → Final Accounts. Trial Balance is therefore
prepared after ledger accounts have been balanced.

3. Objectives of Trial Balance
It helps check the arithmetical accuracy of ledger posting, brings all ledger balances together, summarizes
accounts and provides a base for preparing the Trading Account, Profit & Loss Account and Balance Sheet.

4. Basic Format
A Trial Balance normally contains S.No., Particulars, L.F., Debit (■) and Credit (■). Each ledger balance is
entered in the appropriate debit or credit column.

S.No. Particulars L.F. Debit (■) Credit (■)

1 Cash A/c 50,000

2 Capital A/c 50,000

3 Purchases A/c 20,000

4 Sales A/c 30,000

70,000 80,000

For a correct Trial Balance, the debit and credit totals should be equal.

5. Accounts Generally Appearing on Debit Side
Assets, Expenses, Purchases, Drawings, Debtors and Losses generally have debit balances.

6. Accounts Generally Appearing on Credit Side
Capital, Liabilities, Sales, Creditors, Income and Profits generally have credit balances.

7. Easy Memory Rule
Assets + Expenses + Purchases + Drawings + Losses → Debit
Capital + Liabilities + Sales + Income + Profits → Credit

8. Example of Ledger Balances
Account Balance

Cash ■20,000 Dr.

Purchases ■30,000 Dr.

Rent ■5,000 Dr.

Capital ■40,000 Cr.

Sales ■25,000 Cr.

Creditors ■10,000 Cr.




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