Trial Balance and Rectification Of Errors

Trial Balance is a statement which accounts all the balances of the Personal account, Real account, and Nominal account regardless of either Revenue or Capital A/c. It comprises 2 columns viz., debit and credit. If the transactions are documented systematically by providing dual-sided effect and later posted methodically, then the total of both the columns would be similar.

In other words, a trial balance is a worksheet record book that reflects the debit and credit balance of all the registered accounts. This worksheet statement is used to prepare the final account report of the company. Trial balance also determines the accuracy of the account. However, it doesn’t ensure that the account is error-free but surely gives mathematical precision.

Objectives of Preparing the Trial Balance

1. To determine the financial efficiency of the ledger accounts- The trial balance helps to keep a record all the credit and debit transactions properly in the ledger and to check if the accounts have been balanced correctly. If both the balance is correct, then it is assumed that the record of the trial balance is correct.

2. To help in the rectification of errors- Whenever the trial balance does not tally management should know that there is at least one error in the accounting process. Few errors that occur are.

  • Subsidiary book total
  • Recording journal entries in a ledger
  • Account balance calculation
  • Transferring account balance to the trial balance
  • Trial balance total

3. To help in the formation of the financial statements- To prepare a financial statement, the final tallied trail balance is required. Here, all expense and revenue account registered in the trial balance is carried to the profit and loss account, and all liabilities, assets, and capital account is carried to the balance sheet.

Preparation of Trial Balance

There are three ways in which a trial balance can be prepared.

1. Total Method- In this method, the total balance of the credit and debit is determined in an individual column and displayed in the trial balance. Both the column’s total should be equal as it is based on the double-entry system.

2. Balances Method- This method is used widely and is prepared by determining the balance of all the ledger account and then summing up the debit and credit total of the trial balance to ensure accuracy.

3. Total-cum-balance Method- This method is the amalgamation of both the total and balance method. In this method, four columns for the amount is made. Two for writing credit and debit totals and the other two for credit and debit balance of the account.

Trial Balance and Rectification of Errors Format

Account Title L.F Debit Balance (₹) Credit Balance (₹)

Buildings and Land

Machinery and Plant


Fixtures and Furniture

Cash in Hand

Cash at Bank


Receivable Bills

Raw Materials Stocks

Finished Goods Stocks


Carriage Inwards

Carriage Outwards


Sales Return

Purchases Return

Interest Paid

Commission / Discount Received


Long Term Loan

Bills Payable


Advances from Customers


Total —– —–

Theory Questions:

Q1.What is a trial balance? State the main features of a trial balance?
(a) Trial balance
  • A Trial Balance is a statement, prepared with the debit and credit balances of the Ledger Accounts.
  • It also includes cash and bank balances taken from Cash Book.
  • It is prepared to test the arithmetical accuracy of the books.
(b) Main features of trial balance
  • It is not the part of Double-entry system of bookkeeping. It is the result of the double entry system of bookkeeping. It is only a working paper.
  • It is only a list of balances of all ledger accounts.
  • It can be prepared at any point of time.
  • It verifies the arithmetical accuracy of the posting.

Q2. (a)What are the main objectives of preparation of a trial balance?


Give the functions of trial balance. 


Trial balance is not a part of double-entry system, still it is very important. Discuss.

 (b) Also enumerate the types of accounts with their respective side, debit/credit.

(a) Main objectives of trial balance


Functions of trial balance

  • Trial Balance is prepared because it helps us:
  • To get a summary of all the ledger accounts.
  • To ascertain the arithmetical accuracy of ledger accounts & locate errors if any.
  • To prepare Final Accounts.
(b) Account having debit balance Following accounts have debit balances:

  • Asset accounts
  • Drawings account
  • Expenses and Losses accounts
(c) Accounts having credit balance Following accounts have credit balances:

  • Liabilities accounts
  • Incomes and Gains accounts
  • Capital account
Q3. State any one limitation of trial balance?
Limitation of trial balance
  •  Trial Balance is not conclusive proof of the accuracy of the books because some errors may remain undetected.

The above mentioned is the concept, that is elucidated in detail about ‘Trial Balance and Rectification Of Errors’ for the Commerce students. To know more, stay tuned to BYJU’S.

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  1. Nice Explanation of the topic