Question

What are the methods of preparing trial balance?

Answer 1

Below are diagrammatically explained methods to prepare Trial Balance.

Let us understand these methods of preparing Trial Balance with the help of an abstract account of Mr. A.

Mr. A’s Account

Dr.

Cr.

2011

2011

Apr.1

Balance b/d

50,000

Apr.7

Cash

30,000

Apr.3

Sales

20,000

Apr.8

Sales Return

20,000

Apr.10

Sales

40,000

Apr.16

Bank

50,000

Apr.30

Balance c/d

10,000

1,10,000

1,10,000

1. Totals method: According to the Totals method, the total of debit and credit sides of an account is shown in the debit and credit columns of the Trial Balance. If the total of the debit column and the total of credit column of Trial Balance are equal, then the Trial Balance is said to agree, otherwise not.

   For example, in the above example, the total of the debit side of Mr. A Account, i.e., Rs 1,10,000 is shown in the debit column of the Trial Balance and the total of the credit side of Mr. A Account, i.e., Rs 1,10,000 is shown in the credit column of the Trial Balance. The total of debit column and the total of the credit column of the Trial Balance are equal to each other.

Trial Balance as on April 30, 2011
Accounts	L.F.	Debit Total Rs	Credit Total Rs
Mr. A’s Account		1,10,000	1,00,000

3. Balance method: According to the Balance method, the balance of ledger accounts is shown in the debit and credit column of the Trial Balance. The balance of ledger may be either debit balance or credit balance. In the former case, the debit side of an account exceeds its credit side; whereas, in the latter case the credit side exceeds the debit side of the account. The sum total of the balances in the debit column of the Trial Balance must be equal to the sum total of the balances in the credit columns of the Trial Balance. It is a commonly used method.

4. For example, Mr A’s account shows a debit balance of Rs 10,000, as the total of the debit side (Rs 1,10,000) exceeds the total of the credit side (Rs 1,00,000). The debit balance of Rs 10,000 will be shown in the debit column of the Trial Balance.

Trial Balance as on April 30, 2011
	Accounts	L.F.	Debit Balance Rs	Credit Balance Rs
	Mr. A’s Account		10,000

5. Total cum balance method: It is a combination of both of the above methods, i.e., Totals method and Balance method.

Trial Balance as on April 30, 2011
	Accounts	L.F.	Debit Total Rs	Credit Total Rs	Debit Balance Rs	Credit Balance Rs
	Mr. A’s Account		1,10,000	1,00,000	10,000