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Why is Trial Balance prepared?
Why is Trial Balance prepared?
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Solution
A Trial Balance is a statement that shows the summary of debit and credit balances of all ledger accounts. A Trial Balance fulfils the following objectives:
a. It checks the arithmetical accuracy of each ledger account.
b. It provides a summary of each ledger account.
c. If the trial balance doesn’t tally, it shows the existence of errors that occurred at the time of recording or posting of transactions.
d. It helps in the preparation of financial statements i.e. Trading and Profit and Loss Account.
A Trial Balance is a statement that shows the summary of debit and credit balances of all ledger accounts. A Trial Balance fulfils the following objectives:
a. It checks the arithmetical accuracy of each ledger account.
b. It provides a summary of each ledger account.
c. If the trial balance doesn’t tally, it shows the existence of errors that occurred at the time of recording or posting of transactions.
d. It helps in the preparation of financial statements i.e. Trading and Profit and Loss Account.
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