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    Accounting For Managers: 04/06/2021 Dr. Shubhendu Vimal 1

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    Snehil Kr
    The document provides information about preparing a trial balance at the end of an accounting period for a sole proprietorship business. It defines what a trial balance is, explains that it lists all general ledger account balances and ensures total debits equal total credits, and outlines the purposes of preparing a trial balance which include checking accuracy, establishing account balances, and preparing financial statements. It also provides examples of journal entries and instructions for posting transactions to accounts and preparing a trial balance.

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    Accounting For Managers: 04/06/2021 Dr. Shubhendu Vimal 1

    Uploaded by

    Snehil Kr
    28 views9 pages
    The document provides information about preparing a trial balance at the end of an accounting period for a sole proprietorship business. It defines what a trial balance is, explains that it lists all general ledger account balances and ensures total debits equal total credits, and outlines the purposes of preparing a trial balance which include checking accuracy, establishing account balances, and preparing financial statements. It also provides examples of journal entries and instructions for posting transactions to accounts and preparing a trial balance.

    Original Title

    Lecture 6

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    The document provides information about preparing a trial balance at the end of an accounting period for a sole proprietorship business. It defines what a trial balance is, explains that it lists all general ledger account balances and ensures total debits equal total credits, and outlines the purposes of preparing a trial balance which include checking accuracy, establishing account balances, and preparing financial statements. It also provides examples of journal entries and instructions for posting transactions to accounts and preparing a trial balance.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    28 views9 pages

    Accounting For Managers: 04/06/2021 Dr. Shubhendu Vimal 1

    Uploaded by

    Snehil Kr
    The document provides information about preparing a trial balance at the end of an accounting period for a sole proprietorship business. It defines what a trial balance is, explains that it lists all general ledger account balances and ensures total debits equal total credits, and outlines the purposes of preparing a trial balance which include checking accuracy, establishing account balances, and preparing financial statements. It also provides examples of journal entries and instructions for posting transactions to accounts and preparing a trial balance.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 9

    Accounting for Managers

    Lecture 6

    04/06/2021 Dr. Shubhendu Vimal 1


    Trial Balance
    Trial balance is a list of debit and credit balances extracted
    from the ledger on a particular date. Since for every debit
    entry there is a corresponding credit entry of the equivalent
    amount, the total of the debit and credit balances should
    agree in equal amount.

    A trial balance essentially proves the arithmetical accuracy


    of the entries passed in the books of account and is derived
    from ledger where all accounts find a place. Trial balance is
    prepared after striking the balance of various accounts in
    the ledger.
    TRIAL BALANCE
    What is a Trial balance?
    It is an internal document.
    It is a listing of all the accounts with their related
    balances.
    It provide a check on accuracy by showing whether
    total debits equal total credits.

    3
    TRIAL BALANCE
    A listing of all accounts with balances at the end of the
    accounting period after all transactions have
    journalized and posted.
    Purpose
    to determine that debits = credits
    to identify accounts to be adjusted

    4
    Objectives of Preparing Trial
    Balance

    It forms the very basis on which final


    accounts are prepared.
     It helps in knowing the balance on any
    particular account in the ledger.
     It is a test of arithmetical accuracy.
    Preparing the Trial Balance
    The purposes of the trial balance:
    To help check on accuracy of posting by
    proving whether the total debits equal the
    total credits
    To establish a convenient summary of
    balances in all accounts for the
    preparation of formal
    financial statements

    6
    Difference b/w cash & trade discount
    Cash discount Trade discount
     It is allowed when payment It is allowed on certain quantity
    is made before a certain being purchased
    date It is given to promote sales
     It is allowed to encourage It may vary with quantity of goods
    early cash payment
     It may vary with period
    within which payment is to purchased
    be made Not recorded in books
     Separate ledger a/c Deducted from invoice
    maintained Offered at the time of sale or
     Not deducted from invoice purchase
     Offered at the time of
    getting quick payment
    Points to remember
    1) Unless instructed to the contrary assume that all
    transactions for the purchase or sale of the goods are on credit.
    When goods are purchased on credit, the accounts affected will
    be
    i) Purchase account ii) Party’s Account

    2) The term Purchase account should be used when goods are


    purchased. The term Sales account should be used when sales
    are sold out.
    3) Return of goods to supplier is recorded in the Return
    Outward or Purchase Return
    4) Return of goods by customer is recorded in the Return
    Inward or Sales Return
    Problem 1
    Journalize the following transactions, post them to ledger and balance the accounts. Also prepare a trial
    balance as on 31st April 2016.
     April 1 Ravi started business with Rs. 15,000 of which Rs. 4,000 were borrowed at 15% p.m. from Shashi
     April 2 Purchased goods on credit worth Rs. 4,000 from Anant at 2% trade discount
     April 3 Cash sales to Madan Rs. 1,200
     April 6 Credit sales to Salvi Rs. 2,000 less trade discount 2%
     April 9 Paid cash Rs. 1,950 to Anant and received discount of Rs. 10
     April 12 Received Rs. 1,950 from Salvi in full settlement of his dues
     April 14 Returned goods of the price of Rs. 100 to Anant
     April 16 Paid into bank Rs. 5,000
     April 18 Issued a cheque of Rs. 1,000 to Anant on account
     April 19 Purchased goods worth Rs. 2,000 from Anant
     April 22 Sold goods costing Rs. 1,000 at 25% profit to Ratan
     April 22 Received commission of Rs. 800 from S & Co.
     April 24 Received a cheque of Rs. 395 from Ratan and deposited on the same day in bank and he was
    allowed discount of Rs. 5
     April 25 Ratan returned goods worth Rs. 50
     April 30 Paid interest on loan of Rs. 50 to Shashi
     April 30 Paid salaries of Rs. 2,000 out of which Rs. 1,200 was paid by cheque
     April 30 Paid into bank Rs. 500
     April 30 Paid office rent by cheque Rs. 300

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