Trial Balance meaning and Its Objective

 Trial Balance:

Trial balance is the schedule of ledger accounts balancing drawn at a particular point of time to check airthmetic  accruacy  of the books of accounts. It is prepared in a loose sheet of paper outside the books of accounts. It is a mare statement not an account. 

Objective of preparing Trial Balance

1. To verify airthmetic accrucy of books of accounts.

2. To provide information for the purpose of preparing final acconts.

Following errors are not disclosed by trial balance are:

1. Error of omission : If a transaction is omitted from journal then their will be no posting in ledger and trial balance will be agreed.

2. Error of Commission: If error is committed either in the name of accounts or in the amount of both the Assets then trial balance is agreed.

3. Error of principle: If a transaction is recorded in disregard of accounting principles relating to capital and revenue nature of transactions . The trial balance will agree.

4. Compensating Error: If an error is neautralised by another error or by a number of errors whose total amount is same then trial balance will be made.

Suspense Account: If a trial balance does not match due to wrong totalling , wrong balancing , wrong posting of ledger , then the difference in trial balance is shown on the Shorter sides of the trial balance under the head Suspense Account or Difference in Books. Suspense Account is used for temporary agreement of trial balance because when errors will be deducted and rectified then Suspense Account will be wiped off from the books.

Accounting Standards

Accounting Standards are the written policy document issued by the government or recognised authority. Accounting Standards Board (ASB) of institute  of Chartered Accountant of India (ICAI) frame accounting Standards.

Every business man required to maintain books of accounts on the basis of Double Entry System. To ascertain correct and true fair of the business a/c .

Note: I am going to provide you a practical sums regarding related chapter. For further update please keep in touch with us. 

Accountancy Solution Point

Ledger In Accountancy in Commerce

Ledger: 

Ledger is the principal books of accounts where all acconts are stored permanently. It is the King of all books of accounts. It helps in preparation of trial  balance and final acconts.

Posting: 

   The act of transferring from Journal to ledger is called posting.

                   Ledger Accounts have two sides left hand side of the amount is called Debit sides and Right hand side of the accounts is called credit sides.

Balancing of an Account:

 If Dr. total of an account is more than Credit total than difference is shown on the shorter sides of by writing " By Balance C/d " and this is called Debit balance of an account. On next day in order to open the account such Debit balance will be shown on the Debit sides by writing " To Balance B/d".

             If Credit total is heavier than Debit total than the difference is shown on the Debit sides by writing "To Balance C/d" and this is called Credit balance. On next day to open the account Credit balance will be shown on credit sides by writing " By Balance b/d" . This whole process is called balancing of an account.

c/d: Carried down = Closing Balance

b/d: Brought down = Opening Balance.

What’s the Difference Between a Journal and a Ledger?

The journal and ledger both play an important role in the accounting process. The business transactions are primarily recorded in the journal and thereafter posted into the ledger under respective heads. While many financial transactions are posted in both the journal and ledger, there are significant differences in the purpose and function of each of these books of accounts.

MEANING:

The financial transactions are summarised and recorded as per the double entry system in a journal. It’s also known as the primary book of accounting or the book of original entry.

The ledger, on the other hand, is known as the principal book of accounting. It records the information from the journal in the “T” format. It is used to create the trial balance which is also the source of the financial statements such as the income statement and the balance sheet

RECORDING TRANSACTIONS:

The process of recording transactions in a journal is called Entry  while the process of transferring the entries from the journal to the ledger is called posting.

The transactions in a journal are recorded in a chronological manner in a Accounting year. On the other hand the arrangement of entries within a ledger has more to do with grouping like transactions together into specific accounts for purposes of assessing the data for accounting purposes.

Important Tips: 

Accountancy is a very easy subject as per my knowledge. Tha most important thing is that you have to take some steps to improve yourself. Always try to learn basic and minor things which is got to help in further education. Commerce is not as difficult as students think. The most valuable things is that always try to beat your best. Then only you can achieve your goals in most appropriate or easy way. Don't give up  always try to compete with yourself and try to beat your own best. My dear friends nothing is impossible to achieve  if you have confidence.

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Examples of Journal Entry and Entity Concept

 

Methods of Accounting:

1. Cash Basis

2. Accrual Basis

1. Cash Basis: Cash Basis is a process wahere all  money received in cash only and all payments made in cash only will be considered. 

2. Accrual Basis: Accrual Basis is a process whether money is received in cash or not or paid in cash or not will be considered.

 

Entity Concept:

Business and businessman are two separate identities or entities . Business transactions are recorded in the books of business and from the point of views the business. When a proprietor invest money into business as capital, then he is treated as creditor of the business.

Example of Journal Entry are: 

Some important journal entry are discussed below. Please watch the notes it is going to help you in preparing for Your examination. Journal is a primary books of accounts.

Narrations:    Narrations is the brief description about the entry passed in books of accounts.

Note: Dr denotes - Debit

           Cr or To denotes - Credit

Let's solved the different types of problems:

1.  Business started with capital of Rs. 250000.

        It's Journal Entry are: 

          Cash A/c.                    Dr 250000

                      To Capital A/c.                  250000

                (Being Business started.)

2. Cash paid to Rohan of Rs.2800

        It's Journal Entry are:

               Rohan A/c.             Dr 2800

                         To Cash A/c.                2800

            (Being cash paid to Rohan.)

3. Goods Sold on credit to Rohit and. Co. Rs 500.

   

           It's Journal Entry are:

          

              Rohit and Co. A/c.      Dr 500

                       To Sales A/c.                     500

         (Goods Sold on credit).

4. Furniture purchased on cash of Rs. 12000.

         It's Journal Entry are:

            Furniture A/c.            Dr 12000

                   To Cash A/c.                          12000

    (Furniture purchased on cash).

5. Cash received from Meraj of Rs. 3800

       It's Journal Entry are:

          Cash A/c.                    Dr. 3800

                 To Meraj A/c.                      3800

        (Cash received).

6. Salary paid to staff of Rs. 4500

        It's Journal Entry are:

            Salary A/c.             Dr. 4500

                   To Cash A/c.                    4500

        (Salary paid to Staff).

7. Rent received from Rohit of Rs.4800

           It's Journal Entry are: 

            Cash A/c                       Dr. 4800

                        To Rent A/c.                     4800

8. Cash  deposited into Bank of Rs 8000

           It's Journal Entry are:

   

                Bank A/c.             Dr 8000

                       To Cash A/c.                 8000

9. Cash withdrawn from Bank of Rs. 4500

         It's Journal Entry are:

          Cash A/c.                  Dr.  4500

                To Bank A/c.                         4500

        ( Cash withdrawn from Bank).

10. Purchase stationery of Rs 600.

             It's Journal Entry are:

           Stationery A/c.           Dr 600

                    To Cash A/c.                     600

11. Cash Withdrawn from business for personal use of Rs 5600

         It's Journal Entry are:

            Drawings A/c.        Dr 5600

                   To Cash A/c.              5600

12. Cash sales of Rs. 15000.

      It's Journal Entry are:

            Cash A/c.                     Dr. 15000

                     To Sales A/c.                         15000

         (Cash Sales).

13. Purchase goods on cash of Rs 1900

           It's Journal Entry are:

             Purchase  A/c.              Dr 1900

                     To Cash A/c.                         1900

        (Purchased goods on cash).

14. Cheque received from Rehan  of Rs 1500.

            It's Journal Entry are:

       Bank A/c.                     Dr.   1500

                 To Rehan A/c.                    1500

     ( Cheque received from Rehan.)

15. Electricity bill paid of Rs 3600

         It's Journal Entry are:

        Electricity bill A/c    Dr.  3600

                  To Cash A/c.                      3600

        (Electricity bill paid).

 

Note: This is going to help in Preparation for Your school examination for class 11 and I will further give you a suggestion for studying acconts. In next topic we are going to cover some advance examples of Journal and also the other concept related to accounts.  So follow us for more details regarding the accounts and please comment. # Think Different.

Journal Entry Introduction

Class 11 Easy Way to learn Journal Entry. Read the whole notes you will get help in Preparation of Journal Entry.

Topics Covered

1. What is Journal Entry??
2. What is Entry??
3. What is Double Entry System???
4. Example of Journal Entry.    
5. Dr denotes - Dr
6. Cr  denotes - Cr 

What is Journal Entry ???

Journal Entry is the primary books of accounts where all transactions are recorded in a chronological manner. In journal there are two sides Debit and Credit.

What is entry??

Entry is a process where transactions are recorded. There will have two sides DEBIT and CREDIT.

What is Double Entry System???

In a Double Entry System of accounting we have two aspects Debit and Credit.In today we follow the rules of Double Entry System. We follow the rules of Double Entry System to prepare books of accounts.

Examples of Journal Entry are:

1. Purchase goods on cash of Rs.1500

       

  It's Journal Entry are:

          Purchase A/c.         Dr. 1500 

                  To cash A/c.                       1500

2. Sold goods on cash Rs. 1000

It's Journal Entry are:

         Cash A/c                       Dr  1000

                     To sales A/c.                     1000

3. Purchase goods on credit from Rahim of Rs.2500

It's Journal Entry are:

     Purchase A/c                  Dr 2500

            To Rahim A/c.                              2500

4. Sold goods on credit to Deepak of Rs. 5000.

It's Journal Entry are:

 Deepak A/c.                        Dr 5000

         To Sales A/c.                                      5000

5. Rent paid to landlord of Rs. 3500

It's Journal Entry are:

    Rent A/c.                      Dr. 3500

          To Cash.                                 3500

6. Salary Paid to  staff of Rs 7500

   It's Journal Entry are: 

          Salary A/c.                Dr  7500

                  To  cash A/c.                       7500

7. Business Started with capital of Rs. 50000. 

      It's Journal Entry are:

         Cash A/c                       Dr 50000

                   To Capital A/c.                     50000

8. Wages paid to workers of Rs. 2600.

            It's Journal Entry are:

              Wages A/c.                  Dr 2600

                          To Cash A/c.                    2600

9. Purchase Furniture of Rs 10000 on cash.

               It's Journal Entry are:

              Furniture A/c.             Dr.  10000

                        To Cash A/c.                       10000

10. Cash paid to Mohit of Rs. 2600.

             It's Journal Entry are:

           Mohit  A/c.                Dr 2600

                   To Cash A/c.                      2600

11. Sold goods Machinery of Rs. 7000 to Mohan.

Explanation: When goods purchased or sold and the name is mentioned of any person and if it is not written that purchase or sold in cash than always treat them On CREDIT.   

                                                                                                It's Journal Entry are:

            Mohan A/c.                Dr. 7000

                    To Sales A/c.                       7000