unit-6-ledger

Unit-6 Ledger

In this unit you will learn about the second stage i.e., recording in the ledger.

What is Trial Balance? Explain how is it prepared?

{{currentAnswerList.length}}   Answers

1   Answers

















































































{{ans.user.userName}}

Written on {{ansDate($index)}}

{{trustHtmlContent(ans.answerContent)}}





Learning Pundits Content Team

Written on Jun 25, 2019 12:52:31 PM

Every debit has its corresponding credit and this equality between debits and credits is the essence of the double entry principle. When a journal entry is passed, every debit has a corresponding credit and this is verified by totaling every page of the journal. However, when the journal entries are posted to various accounts in the ledger, the debits and credits get scattered and recorded in different accounts. Thus the individual debits and credits forego their identity and get merged. At this stage it is necessary to ensure that posting into ledger has been correctly done and to check whether the equality between debits and credits has been maintained throughout. For this purpose, a statement showing the balances of various accounts is prepared. This statement is known as ‘Trial Balance'.

The Trial Balance is usually prepared just before the preparation of final accounts in order to check the arithmetical accuracy of posting into ledger. However, to demonstrate the mechanics of its preparation and to impress upon you the ability of the Trial Balance in providing test of the arithmetical accuracy, an attempt is made here to prepare the Trial Balance.

Since, under the double entry system, every debit has equal and corresponding credit, the total of debits given to different accounts must equal the total of credits given to different accounts. Continuing the same logic, since the balance on an account represents the net effect of various debits and credits posted to that account, the total of debit balances on different accounts must be equal to the total of credit balances on different accounts. Thus the two totals i.e., the total of debit balances and the total of credit balances should tally thus upholding the debit-credit equality. If however, the two totals do not tally, it would simply mean that there are certain errors in posting.



Weekly Contests Leaderboard


Rank - {{getRank($index,weeklyWinner)}}: {{weeklyWinner.userName}}

Loading...

« Previous Next »

Subscribe to our RSS Feed