Brief description:- Trial balance is periodical statement which is made on a particular date with the help of the ledger and cash books to check the arithmetical errors in the accounts. The closing balance of the accounts are shown in trial balance on a particular date. The final accounts are prepared with the help of the trial balance.
The Uses and Characteristics of Trial Balance:- Keeping in mind the definition of the trial balance we can define the following characteristics and use of the trial balance:-
- Trial balance is prepared in tabular form only. It contains debit column for debit balance of accounts and credit column for credit balances of accounts.
- Only the closing balances of the accounts are shown in trial balance.
- The closing balance of stock is never shown in trial balance. It is always shown as foot note.
- Other adjustments against which no entries are passed in the books also not shown in trial balance. They are also shown as footnotes.
- The trial balance is prepared on a particular date as required by the management or at the end of the financial year.
- Trial balance is not an account. It is a statement only.
- The balance of all accounts is shown at one place. Thus it is the summary of all accounts.
- It shows the arithmetical mistake of the entries.
- Trading, profit and loss account and the balance sheet are prepared with the help of trial balance only.
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