Trial Balance -;Gt"ng k/LIf)f_

By
Kushmakhar Neupane
Chartered Certified Accountant
Email: k.neupane@ntc.net.np
 BASICS OF ACCOUNTING

DOUBLE ENTRY SYSTEM

3 TYPES OF ACCOUNTS:

-- REAL: ASSETS OF BUSINESS, TANGIBLE AND

IDENTIFIABLE.

-- PERSONAL: THEY ARE HEADED WITH THE NAME OF

PERSON/BUSINESS/FIRM. DEBTORS OR CREDITORS.

-- NOMINAL: THEY RECORD TRANSACTIONS OF

INTANGIBLES SUCH AS RENT EXPENSES.

. -- Accounting Equation : Assets+Exp=Cap.+Liab.+Income

 TRIAL BALANCE

DEFINITION

IT IS A STATEMENT SHOWING CREDIT AND DEBIT

BALANCES FROM THE LEDGER.

HELPS ARITHMETICAL ACCURACY AND FACILITATES

FINAL ACCOUNTS.
 Objectives of the Trial Balance

TO ASCERTAIN THE ARITHMETICAL ACCURACY OF

LEDGER ACCOUNTS.

TO FACILITATE THE PREPARATION OF THE FINANCIAL

STATEMENTS.

TO HELP IN LOCATING ERROR.

Error due to partial omission of Transactions
Wrong balancing
Wrong Totaling
Exclusion of a particular ledger a/c in a trial balance
 TRIAL BALANCE

BASIC PRINCIPLE :

SINCE IT IS DOUBLE ENTRY BOOK-KEEPING, HENCE,

ASSETS AND EXPENSES ARE DEBIT BALANCES

LIABILITIES AND INCOMES ARE CREDIT BALANCES

. IN CASE OF ARITHMETICAL INACCURACY IDENTIFY

CLERICAL/PRINCIPLE ERRORS AND RECTIFY

 TRIAL BALANCE

TYPICAL TRIAL BALANCE

NAME DEBIT
CREDIT
CAPITAL X
DRAWINGS X
PURCHASES X
SALES X
EXPENSES X
DEBTORS(CUSTOMRES) X
CREDITORS(SUPPLIERS) X
CASH X
SALES RETURN X
Prepare the Trial Balance of the Everest Co. on 32nd Ashadh, 2071 from the
following information.
Opening Stock 35,000
Advertising 7,000
Wages 1,500
Factory Rent 1,500
Carriage inward 1,000
Return inward 550
Salaries 3,300
Office Rent 700
Plant 10,000
Purchase 1,30,000
Capital 40,000
Reserve for Baddebts 500
Bills Receivable 1,500
Cash 3,500
Discount (Cr) 800
Bills payable 4,700
Furniture 200
Debtors 8,500
Sales 1,59,100
Return Outward 350
General expenses 800
Drawings 3,000
Creditors 4,600
Insurance 200
 Preparation of Trial Balance

Dr Cr
Opening Stock 35,000
Advertising 7,000
Wages 1,500
Factory Rent 1,500
Carriage inward 1,000
Return inward 550
Salaries 3,300
Office Rent 700
Plant 10,000
Purchase 1,30,000
Capital 40,000
Reserve for Baddebts 500
Bills Receivable 1,500
Cash 3,500
Discount (Cr) 800
Bills payable 4,700
Furniture 200
Debtors 8,500
Sales 1,59,100
Return Outward 350
General expenses 800
Drawings 3,000
Creditors 4,600
Insurance 200
Suspence A/C 1800 -
Total 210050 210050
SELF TEST EXAMPLE:
Prepare a Trial Balance from the following ledger
balances:

Capital 2,000.00

Purchase 4,000.00

Sales 8,000.00

Land and Building 3,800.00

Purchase Return 400.00

Sales Return 620.00

Bank Balance 2,000.00

 Preparation of Trial Balance
Particular Debit Credit
Capital 2000
Purchase 4000
Sales 8000
Land and Building 3800
Purchase Return 400
Sales Return 620
Bank Balance 2000
Miscellaneous Income 1120
Bank Loan 4000
Plant and Machinary 4000
Sundry Expenses 1100
Total 15520 15520
 ANY QUERIES MAY BE ADDRESSED
TO

k.neupane@ntc.net.np