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The Main Source of Trial Balance

   

Added on  2020-02-03

9 Pages1640 Words125 Views
Finance

Table of ContentsTask 5.............................................................................................................................3Main sources through which trial balance is prepared...............................................3Format of Trial Balance.............................................................................................3Task 6.............................................................................................................................3Task 7.............................................................................................................................4Task 8.............................................................................................................................5References......................................................................................................................9

TASK 5Identify the main sources through which a trial balance can be prepared. Explainwhat these sources are in detail. Then explain the format of the trial balance i.e. thestructure of the trial balance (Hint: Explain what is recorded on the left hand sideand the right hand side of the trial balance)Main sources through which trial balance is preparedA trial balance is prepared after all the journal entries for the period have beenrecorded.The main source of trial balance is ledgers while ledgers are prepared bytaking journal entries from journal. So, we can say ledgers are obtained after passingjournal entries in journal and then posting it in ledgers.A trial balance is a statement of ledger account balances within the ledger at aparticular instant (Mohantyand et. al., 2012).And, if we all the ledger accounts at aparticular instance and then prepare a statement of balances then we get the trialbalance.The purpose of trial balance is also to check the arithmetic accuracy ofaccounting. If there exists an error in balancing debit or credit side then it means thatthere is some error either in journal or in ledger or trial balance also. In the debit side of trial balance we record all the expenses and assets. Forinstance: Debit side of the trial balance includes information about advertisement andother miscellaneous expenses etc. Besides this, it also contains amount regarding theland, machinery, furnitures, cash etc. On the other side, credit side of trial balancefurnishes information pertaining to profit and liabilities. For instance: GP, NP, bankoverdraft, issue of shares, bank loan, overdraft etc. In this way, trial balance helps inpreparing further financial statements to the large extent.Format of Trial BalanceTrial Balance of M/s ABC Company as on December 31, 2015ParticularsL/FAmount (Dr.)Amount (Cr.)Cash-10,000Capital-100,000Furniture-15,000

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