Importance Of Trial Balance
The trial balance is important due to the following reasons
* Trial balance summarizes all the financial transactions of the business.
* Trial balance provides a check on the arithmetical accuracy of recordings of all the financial transactions of the business.
* Trial balance helps in locating errors by providing a starting point for the location of errors committed if any.
* Trial balance provides a basis for the preparation of final accounts.
Methods Of Preparation Of Trial Balance
The following are the methods of preparing a trial balance
1. Total Method
Under total method, trial balance is prepared by taking up the total of debits and credit of all ledger accounts.
2. Balance Method
Under balance method, only the balances of all the ledger accounts are taken up to prepare the trial balance.
3. Compound Method
Compound method is the combination of both the methods, total method and balance method. Thus, compound method is also known as total cum balance method/
The trial balance is important due to the following reasons
* Trial balance summarizes all the financial transactions of the business.
* Trial balance provides a check on the arithmetical accuracy of recordings of all the financial transactions of the business.
* Trial balance helps in locating errors by providing a starting point for the location of errors committed if any.
* Trial balance provides a basis for the preparation of final accounts.
Methods Of Preparation Of Trial Balance
The following are the methods of preparing a trial balance
1. Total Method
Under total method, trial balance is prepared by taking up the total of debits and credit of all ledger accounts.
2. Balance Method
Under balance method, only the balances of all the ledger accounts are taken up to prepare the trial balance.
3. Compound Method
Compound method is the combination of both the methods, total method and balance method. Thus, compound method is also known as total cum balance method/
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