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 .

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