Question

Answer in only one sentence :

Mention the steps involved in preparation of Trial Balance.

Answer 1

The following are the steps that are involved in the preparation of a Trial Balance.

Step-1:
List down all the name of the ledger accounts with their respective balances in the ‘Particulars’ column.

Step-2:
If any account has a debit balance, then the amount is shown in the ‘Debit’ column. Similarly, if any account has a credit balance, then the amount is shown in the 'Credit' column.

Step-3:
While following the Step-2, it should be noted that if in case any account does not have any balance, then it should be ignored and will not be shown in the Trial Balance.

Step-4:
After this, we need to focus on the second column which records the Ledger Folio number. In this column, the L.F. numbers of the accounts are recorded.

Step-5:
Lastly, all the debit balances are totaled and the sum amount is recorded in the last row that shows the total amount. In the similar manner, all the credit balances are totaled and shown. The total of debit balances should match with that of the credit balances. This equality ensures the arithmetical accuracy.

Step-6:
It should be noted, if due to some reason, the aforementioned equality is not attained, then all the steps from 1 to 5 should be rechecked. However, if still the difference persists, then for the time being the difference amount is transferred to the Suspense A/c to avoid any delays in preparing the financial statements.