TRIAL BALANCE Trial balance is a statement prepared with Debit and credit balances of - PowerPoint Presentation

1. TRIAL BALANCETrial balance is a statement prepared with Debit and credit balances of the ledger account to test the arithmetical accuracy of the books.FORMAT OF A TRIAL BALANCE Trial Balance as on (DATE)ITEMS RELATED WITH THE PREPARATION OF TRIAL BALANCE1 . A trial balance is prepared with the help of ledger and cash books.2 . Ledger account showing debit balance are shown on debit column of a trial balance and ledger account showing credit balances are shown on credit column.3 . Purchase a/c always shows a debit balance which is shown in debit column of a trial balance . Purchase return always shows credit balance , so it is shown in the debit side of trial balance . Head of Account L.F. Amount Dr. (Rs.) Amount Cr. (Rs.)

2. 4 . Sales a/c always shows a credit balance so it is shown in credit side of a trial balance while sales returns is shown in debit side of a trial balance .5 . Opening stock a/c always shows a debit balance so it is shown on the debit side of trial balance . 6 . Generally closing stock(inventory ) does not appear in the trial balance , it is usually given as an additional information or adjustment outside the trial balance .7 . Account of assets , drawings , debtors , expenses and losses shows debit balances , so they are shown on debit side of trial balance.8 . Accounts of income and gains , liabilities , capital , creditors show credit balances so they are shown on credit side of trial balance . TRADING ACCOUNTS / FINAL ACCOUNTSPreparation of the trading account is the first stage in the process of preparing the final accounts . Trading account is prepared to calculate gross profit or gross loss during an accounting year . Gross profit or loss is the difference between sales and cost of goods sold . If the amount of sales exceeds the goods sold , gross profit is earned conversely gross loss is incurred . For calculating cost of goods sold , opening stock , purchase , direct expenses on purchasing , manufacturing goods , closing stock are considered .

3. FORMAT OF TRADING ACCOUNT Trading a/c of Ms. (company owner ) as on (Date) Particulars Amount in Rs. Particulars Amount in Rs.To opening stock By salesLess sales return / return inwardTo Purchase Less Purchase return / return outward By closing stockTo direct expensesBy gross loss transferred to profit / loss a/cTo wages and salariesTo freight , freight inwardTo carriage , carriage inwardTo octroidutyTo factory power and fuelTo factory lightening

4. From the following balances , prepare trading a/c for year ended 31 March , 2022 Stock on 1 April 2021 10,000Wages 5,000Sales 1,55,000Return outward 8,000Freight 500Purchase 1,00,000Carriage inward 1,000 Return inward 5,000Octroiduty 2,500Closing stock as on 31 March 2021 was valued at 20,000 To factory rent To factory insuranceTo duty on purchase royalities To consumable storesTo gross profit transferred to Profit and loss a/c

5. Gross profit transferred to credit side of profit and loss a/c and gross loss transferred to debit side of loss / profit a/c . Net profit and net loss obtained in profit and loss a/c will be added and subtracted in the capital a/c of balance sheet. Particulars Amount in Rs. Particulars Amount in Rs.To opening stock 10,000By sales 1,55,000Less sales return 5,000 1,50,000To purchase 1,00,000Less purchase return 8,00092,000By closing stock20,000To wages5,000To freight500To carriage inward1,000To octroiduty2,500To Gross Profit transferred to P/L a/c1,70,0001,70,000

6. Gross profit transferred to credit side of profit and loss a/c and gross loss transferred to debit side of loss/ profit a/c . Net profit and net loss obtained in profit and loss a/c will be added and subtracted in the capital a/c of balance sheet.