Preparing the trial balance from ledger and also to

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Chapter 7 / Exercise 1
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preparing the Trial Balance from Ledger. And also to make student aware of that tallying trial balance is not the conclusive proof of everything is right. There is also brief explanation about how to locate the error.5.1 Introduction 1. A Trial Balance is a summary of all the ledger balances outstanding as on a particular date. All the debit balances from the Ledger are shown on one side and all the credit balances are shown on the other side. You are aware that a debit balance in a ledger account indicates an excess of debit side over the credit side of the account. Similarly, a credit balance in a ledger account indicated the excess of credit side over the debit side. Now, if all the debit and credit balances were recorded on the two sides of the Trial Balance, it stands to reason that the two sides should be equal, since each item of debit, there was a credit item.5.2 How to Prepare a Trial Balance1. A Trial Balance is usually prepared in a register with debit and credit columns. The debit and credit sides of each ledger account (including cash and bank balances) would be totalled up as at the date of the Trial Balance (at the end of the month) in order to ascertain whether there is any balance and, if so, whether such balance is a debit or credit balance. The balance of each such account would then be entered in the Trial Balance.5.3 Format of Trial BalanceRuling of a Trial Balance is given below:Trial Balance As On 31 DecemberSerial No.Name of AccountL.FDebit Rs.Credit Rs.Example 11. Given below is a Trial Balance prepared as on January 31, 2005 for Unit Run Canteen of a Station by placing the debit and credit ledger balances appropriately.
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Accounting for Managers61NotesAmity Directorate of Distance and Online Education5.5 Trial Balance: Errors and Their Rectification1. The Trial Balance is prepared to ensure the arithmetical accuracy of the records of a business and also to ensure that for every debit entry a credit of an equal amount has been recorded. Thus, a Trial Balance in which the total of the debits does not equal the total of credits can be taken as an evidence for the existence of some errors in the records. On the other hand, a Trial Balance in which the total of the debits equals the total of credits is not a conclusive proof of the accuracy of the records. Certain errors may not affect the agreement of a Trial Balance as the erroneous entries may not violate the dual aspect concept. It means that even if the Trial Balance agrees, steps should be taken to ensure that the records are free from the errors.2. To understand the nature of errors and their rectification we may classify them into:(a) Errors disclosed by a Trial Balance and(b) Errors not disclosed by a Trial Balance.5.5.1 Errors disclosed by a Trial Balance1. The errors which cause a mismatch in the Trial Balance totals are frequently referred to as errors disclosed by a Trial Balance. However, the mismatch does not automatically point to the actual errors. It is only the diligence and ingenuity of

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