Procedures of Preparation to Trial Balance

A trial balance is prepared on daily or monthly or yearly basis as per the requirement of the business. It is prepared on a given date in a separate sheet of paper. The trial balance is prepared using a total method or balance method or compound method.

1. Total method: Under this method trial balance is prepared with the debit and credit totals of all the ledger accounts.
2. Balance method: Under this method trial balance is prepared with the debit and credit balance of all the ledger account.
3. Compound method: Under this method trial balance is prepared both with the total and balance of all the ledger account. This method is a combination of total and balance method which is also known as total cum balance method.

Generally, the trial balance is prepared by using the balance method. Under the trial balance, first of all, the transactions are recorded either in journal or subsidiary books. Thereafter posting is made in the ledger and balance are obtained. Finally, the trial balance is prepared with the help of these ledger balances. The specimen of the trial balance under balance method is as follows:

Each column of trial balance records the information as follows:

1. Serial number (S.No.): It records the serial number of the account.

2. Head of the account: It records the name of the ledger account.

3. Ledger folio (l.F): It records the name of the page number of the ledger where the concerned account is located.

4. Debit balance: It records the amount of the account having a debit balance.

5. Credit balance: It records the amount of the account having a credit balance.

The following is the list of possible items, which are included in the trial balance.