What is Trial Balance| सन्तुलन परिक्षण


What is Trial Balance?

Let closely observe the position of the trial balance in the following diagram. Trial balance sits right between the bookkeeping and the reporting. It works as a bridge between book or record keeping and reporting section of accounting.

accounting concept
Accounting Process
  • Trial balance is the bridge between bookkeeping and reporting.
  • In accounting, the trial balance is the list of the ledger.
  • Trial balance is base for the preparation of the financial statement.
  • Trial balance is a summary of all financial transactions.
  • Trial balance is a tool for checking the arithmetic accuracy.

(Remember 5 things bridge, list, base, tool, summary)

Errors that Trial Balance Can Locate

Trial balance can only find out the arithmetic errors. Which is also called one-sided error. An arithmetic error may occur in the following conditions

  • Different amount of entry in Dr. and Cr. side of the journal
  • Different amount posted in the ledger while transferring from the journal.
  • Different amount in the Dr. and Cr. in the ledger.
  • Different amount posted in the trial balance while transferring from the ledger.
  • Due ot lack of dual and equal effect on journal vouchar.
  • Mistake in summation of trial balance.

These are the reason for the arithmetic error. These types of errors are corrected by checking the journal and ledger.

Trial Balance मा दुवै तर्फ बराबरी आउनु भनेको Arithmetic Error नहुनु मात्र हो तर यसमा तल उल्लिखित हुन सक्छ।

Errors that cannot detect by trial balance

1) Error or principle

2) Compensating Error

3) Error of Duplication

4) Error of Commission/Posting Error

5) Error of Omission

1) Error or principle

The error of principle occurs when there is a mismatch between capital nature transaction and revenue nature transaction. Example amount of marker posted in the furniture title.

2) Compensating Error

Compensating error occurs when one error overlapped by another error. If the same amount is debited in on title in Dr. side and the same amount is credited in another title of Cr. side then this error/mistake is called compensating error.

3) Error of Duplication

The error of duplication occurs when the amount is posted two or more than two times in the same heading.

4) Error of Commission/Posting Error

The error of commission or posting error occurs when under posting and overposting of the particular transaction on the debit side as well as the credit side of the table.

5) Error of Omission

The error of omission occurs when no original posting is done in the table. (Not posting in a ledger)

These errors can be corrected by the following methods

  1. Cross verification
  2. Internal audit
  3. External audit
  4. Customer complain

Methods of making trial balance

  • The format of the trial balance is two column schedule with all the debit balance listed on one column and all the credit balance listed in another.
  • The trial balance is prepared after all the transaction for a certain period of time have been journalized and posted on the general ledger.
  • There are three methods of preparing a trial balance
  1. Net balance method (खुद मैज्दात विधि)
  2. Total balance method (कुल मौज्दात विधि)
  3. Mixed method (मिश्रित मौज्दात विधि)
  1. Net balance method (खुद मैज्दात विधि): If the trial balance is prepared with the balancing figures of each and every ledger then such method is called the net balance method. In other words, if trial balance is prepared by using the only closing balance of the ledger then such trial balance is said to be a net balance method.
  2. Total balance method (कुल मौज्दात विधि): If the trial balance is prepared with all the summation of a debit figure as well as credit figure of each and every ledger then such a method is called total balance method. Due to practical inconvenience, this method is not in practice.
  3. Mixed method (मिश्रित मौज्दात विधि): Mixed method is a combination of net balance method and total balance method.

 Example of Trial Balance

The trial balance of ABC firm as on 31st Asar 2075

S.N.ParticularsL.FDr BalanceCr Balance
1All ledger balance of assets4,00,000-
2All ledger balance of expenses5,00,000-
3All ledger balance of losses1,00,000-
4All ledger balance of capital-3,00,000
5All ledger balance of liabilities-2,00,000
6All ledger balance of gain-1,00,000
7All ledger balance of income-4,00,000

We use the fictitious amount to balance the trial balance