Question

What are the methods of preparation of trial balance?

Answer 1

Trial Balance is prepared in the following methods:

1. Balance method: In this method, the balance of every ledger account either debit or credit, as the case may be, is recorded in the trial balance against the respective accounts. The balance method is widely used, as it helps in the preparation of financial statements.

2. Total method: Under this method, the total amounts on the debit side of the ledger accounts and the total amounts on the credit side of the ledger accounts are ascertained and recorded in the trial balance. This method is not commonly used as it cannot help in the preparation of financial statements.

3. Total and Balance method: This method is a combination of both the total method and the balance method. Under this method, four columns are provided, namely,

• Totals of the debit side of the ledger accounts,
• Totals of the debit side of the ledger accounts,
• Totals of the debit side of the ledger accounts,
• Credit balances of the ledger accounts. This method is not in practice.