Here is a term paper on ‘Trial Balance’ for class 11 and 12. Find paragraphs, long and short essays on ‘Trial Balance’ especially written for school and college students.
Term Paper on Trial Balance
Term Paper Contents:
- Term Paper on the Meaning and Definition of Trial Balance
- Term Paper on the Objectives of Preparing a Trial Balance
- Term Paper on the Features of Trial Balances
- Term Paper on the Methods of Preparing Trial Balance
- Term Paper on the Ruling of a Trial Balance
- Term Paper on Trial Balance Errors
- Term Paper on the Limitations of Trial Balance
Term Paper # 1. Meaning and Definition of Trial Balance:
According to the dual aspect concept, the total of debit balance must be equal to the credit balance. It is a must that the correctness of posting to the ledger accounts and their balances be verified. This is done by preparing a trial balance.
Trial balance is a statement prepared with the balances or total of debits and credits of all the accounts in the ledger to test the arithmetical accuracy of the ledger accounts. As the name indicates it is prepared to check the ledger balances.
If the total of the debit and credit amount columns of the trial balance are equal, it is assumed that the posting to the ledger in terms of debit and credit amounts is accurate. The agreement of a trial balance ensure arithmetical accuracy only, A concern can prepare trial balance at any time, but its preparation as on the closing date of an accounting year is compulsory.
According to M.S. Gosav “Trial balance is a statement containing the balances of all ledger accounts, as at any given date, arranged in the form of debit and credit columns placed side by side and prepared with the object of checking the arithmetical accuracy of ledger postings”.
Term Paper # 2. Objectives of Preparing a Trial Balance:
(i) It gives the balances of all the accounts of the ledger. The balance of any account can be found from a glance from the trial balance without going through the pages of the ledger.
(ii) It is a check on the accuracy of posting.
If the trial balance agrees, it proves:
(a) That both the aspects of each transaction are recorded and
(b) That the books are arithmetically accurate.
(iii) It facilitates the preparation of profit and loss account and the balance sheet.
(iv) Important conclusions can be derived by comparing the balances of two or more than two years with the help of trial balances of those years.
Term Paper # 3. Features of Trial Balances:
The following are the important features of a trial balances:
(i) A trial balance is prepared as on a specified date.
(ii) It contains a list of all ledger account including cash account.
(iii) It may be prepared with the balances or totals of Ledger accounts.
(iv) Total of the debit and credit amount columns of the trial balance must tally.
(v) It the debit and credit amounts are equal, we assume that ledger accounts are arithmetically accurate.
(vi) Difference in the debit and credit columns points out that some mistakes have been committed.
(vii) Tallying of trial balance is not a conclusive profit of accuracy of accounts.
Term Paper # 4. Methods of Preparing Trial Balance:
A trial balance refers to a list of the ledger balances as on a particular date.
It can be prepared in the following manner:
1. Total Method:
According to this method, debit total and credit total of each account of ledger are recorded in the trial balance.
2. Balance Method:
According to this method, only balance of each account of ledger is recorded in trial balance. Some accounts may have debit balance and the other may have credit balance. All these debit and credit balances are recorded in it. This method is widely used.
Term Paper # 5. Ruling of a Trial Balance:
The following is the form of a trial balance:
Method I: Total Method ST’s Books:
Method II: Total Method MT’s Books:
Note: Account of all assets, expenses, losses and drawings are debit balances.
Accounts of incomes, gains, liabilities and capital are credit balances.
Term Paper # 6. Trial Balance Errors:
Trial balance disclosed some of the errors and does not disclosed some other errors.
This is given below:
(A) Trial Balance Disclosed by the Errors:
(i) Wrong totaling of subsidiary books
(ii) Posting of an amount on the wrong side
(iii) Omission to post an amount into ledger
(iv) Double posting or omission of posting
(v) Posting wrong amount
(vi) Error in balancing
(B) Trial Balance not Disclosed by the Errors:
(i) Error of principle
(ii) Error of omission
(iii) Errors of Commission
(iv) Recording wrong amount in the books of original entry
(v) Compensating errors
Term Paper # 7. Limitations of Trial Balance:
The following are the important limitations of trial balances:
(i) The trial balance can be prepared only in those concerns where double entry system of book-keeping is adopted. This system is too costly.
(ii) A trial balance is not a conclusive proof of the arithmetical accuracy of the books of account. It the trial balance agrees, it does not mean that now there are absolutely no errors in books. On the other hand, some errors are not disclosed by the trial balance.
(iii) It the trial balance is wrong, the subsequent preparation of Trading, P & L Account and Balance Sheet will not reflect the true picture of the concern.