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Question
What are the methods of preparing trial balance?
Solution
A trial balance can be prepared in the following three ways:
1. Totals Method: In this method, the total of the debit and the credit side of the ledger is determined and presented separately in the trial balance.
The total of both the sides should match as the accounts are based on double-entry system.
2. Balances Method: In this method, the balances of all ledger accounts are presented in their respective debit and credit columns of the trial balance.
The total of both the sides should match as the accounts are based on double-entry system and this method of preparing a trial balance is widely used because it helps in the preparation of financial statements.
3. Totals-cum-balances Method: This method is a blend of the totals and balances method.
This method has four columns.
The first two columns are to write the totals of the debits and credits of the various accounts and the other two columns are to write the debit or the credit balances of these accounts.
This method is time-consuming, and hence are not used widely.
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RELATED QUESTIONS
Answer in one sentence only
What is Trial Balance?
Write the word, term, phrase, which can substitute the statement.
A Trial Balance in which only net balances of all ledger accounts are transferred.
State whether the following statements are ‘True or False’ with reasons.
Trial balance is based on the double entry principle that for every debit there is equal amount of corresponding credit.
State whether the following statement is ‘True or False’ with reasons.
Agreement of Trial Balance always proves accounting accuracy.
After the preparation of ledger, the next step is the preparation of ____________.
The account which has a debit balance and is shown in the debit column of the trial balance is ____________.
Trial balance is prepared ____________.
Prepare a trial balance with the following information:
| Name of the account | ₹ | Name of the account | ₹ |
| Purchases | 1,00,000 | Sales | 1,50,000 |
| Bank Loan | 75,000 | Creditors | 50,000 |
| Debtors | 1,50,000 | Cash | 90,000 |
| Stock | 35,000 | Capital | 1,00,000 |
