A trial balance is a statement that lists the debit and credit balances of all accounts in the ledger. It is prepared to check the arithmetic accuracy of the books, ensure the double entry of transactions, and provide a list of balances to help prepare the final accounts of profit and loss and balance sheet. Some advantages are that it connects the ledger to final accounts, helps find and correct errors, and serves as the basis for final accounts. Limitations include only applying to double entry systems and being costly for small businesses. The trial balance format lists account titles, debit balances, and credit balances.

1. Trial balance
According to J.R.Botloboi
“Trial balance is a statement prepared with the
debit and credit balance of ledger account to
test the arithmetical accuracy of the books”

2. Objectives of Trial Balance
• To check the arithmetical accuracy of ledger.
• To have proof that the double entry of each
transactions has been properly recorded.
• To give balance of all ledger accounts in one
place.
• To prepare profit and loss account and
Balance Sheet.

3. Advantages
• It is a connecting link between ledger and final
accounts.
• It helps in reduction of errors.
• It is base for preparation of final accounts.
• It helps to rectify the errors before preparing
final accounts.

4. Limitations
• It can be prepared under double entry system.
• It is costly for small business organisations.
• If the ledger accounts are wrong the result
given by trial balance also may be wrong.

5. Format of Trial balance
s/n Particulars Lf debit credit
1 Capital --------------- xxxxx
2 Drawings xxxxxx -----------
3 Liabilities (loan, creditors, bank
overdraft)
--------------- xxxxx
4 Assets (cash B/R, cash at bank
machinery,debtors,furniture)
xxxxx -----------
5 Expenses ( salary, rent
wages,advt,discount, carriage
Discount)
xxxxx ---------
6 Incomes (rent, commission,
interest, discount)
------------ xxxxxx
7 O/s expenses ------------ Xxxxxx
8 0/s incomes xxxxxxx ------------

6. s/n Particulars Lf debit credit
9 Purchase xxxxx -----------
10 Sales ------------- Xxxxxx
11 Purchase return ------------- Xxxxxx
12 Sales return xxxxxx -----------