Page 20 - IC26 LIFE INSURANCE FINANCE

TRIAL BALANCE

Meaning : After posting the accounts in ledger, a statement is prepared to show separately

the debit and credit balances. Such a statement is known as trial balance. The format of trial
balance is given below:

Trial Balance of ...as at...

Sl. No. Name of Ledger A/c's L.F. Amount (Dr.) Amount (Cr.)

2. Method of preparation of trial balance:

1) Total Method - Every ledger total amount (both of debit and credit side) is
transferred to the trial balance.

2) Every ledger account is balanced and those balances only are carry forward to the
trial balance.

3) Total And Balance Method- Under this method the above two methods are
combined.

3. Limitations of trial balance: Trial balance is not a conclusive proof of accuracy. In spite of
matching of trial balance some errors may remain:

a) If a transaction has not been entered in the journal
b) A wrong amount has been written in both columns
c) A wrong account has been mentioned
d) An entry has been omitted to post
e) If an entry is posted twice in ledger

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