Question

Explain the methods of preparing a Trial Balance. Which method do you consider to be better and why?

Answer 1

Methods of preparing a trial balance are as follows:

1. Total Method: Records totals of debit and credit sides of ledger accounts (Gross Trial Balance). Checks arithmetical accuracy but misses final account preparation help.
2. Balances Method: Records only balances (Net Trial Balance). Saves time and aids final accounts but is time-consuming to extract balances.
3. Combined Method: Records both totals and balances, combining advantages but is time-consuming.

Better method: Balances Method, as it provides ready information for final accounts and saves time by excluding zero-balance accounts.