Question

State the objectives of trial balance

Answer 1

1. For Checking Arithmetical Accuracy:-

It is based on the double-entry principle of debit equals credit or credit equals debit. As a result, the debit and credit columns of trial balance always should be equal. If they do, it means that the recordings of financial transactions are accurate. Therefore , if they do not, it is assumed that they are not authentically accurate.

2. Helping to  Locate Accounting Errors:-

Since the trial balance indicates if there is any error found in the journal and the ledger, it helps the accountant to locate the error because the starting point of locating errors is trial balance itself.

3. For Summarizing  Financial Transactions:-

Several numbers of financial transactions during a certain period of time are performed by a business. The transactions themselves can not portray any picture of the financial affairs of the business. For that purpose, a summary of the transactions has to be made. The trial balance is prepared with a view to summarize all the financial transactions of the business.

4. Providing The Basis For Preparing Final Accounts:-
These accounts are prepared to show profit and loss and the financial position of the business at the end of an accounting period. These accounts are prepared by using the debit and credit of all ledger accounts. It provides the basis for the preparation of the final accounts

Answer 2

State the objectives of trial balance...

Trial Balance refers to the statement which shows the record of the final ledger balance of all the accounts in a business. The trial balance consists of two columns, debit and credit columns. A trial balance is prepared at the end of a business year and its purpose is to prepare the balance sheet of financial statements such as profit and loss accounts.

The main objectives of trial balance are as follows:

• Trial balance helps in finding out the arithmetical errors that occur while preparing an account.
• Trial balance is helpful in preparing the financial statement of a company at the end of a financial year.
• Trial Balance is helpful in providing the closing balance of Expenses and Revenue Accounts. Trial balance is helpful in proving the financial transactions done in the course of carrying on the business.
• Trial balance also helps the management of a business in taking any business decision.
• Trial balance helps in finding the error of an accountant.

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