The concept of 'dual aspect' is one
of the fundamentals to the accounting theory. The 'dual aspect' concept lays
down that every transaction has two-sided effect to the extent of same amount.
By now you should have observed that for every debit entry that is given to an
account, or for every series of debits given to several accounts, there is a
credit or a series of credits of an equal amount given to some other accounts
and vice versa. It follows, therefore, that any time the debit balances standing
in all the ledger accounts will equal to credit balances.
At the end of the financial year
(or at any other time) the balance (or totals) of all the ledger accounts arc
extracted, and a schedule is prepared in journal form to test whether in fact,
the total debits equal the total credits. This schedule of balances is called a
Trial Balance. j
If the totals agree-what does it
mean? It provides a reasonably reliable check and proves the arithmetical
accuracy of the book-keeping entries.
If the totals do not agree-what
does it mean? It shows that there is definitely something wrong b (some error)
either in thy passing of the double entry or in the extraction of
balances.
According to Carter, "Trial Balance
is the list of debit and credit balances, taken out from ledger, it also
includes the balances of cash and bank taken from cash book."
According to Pickles, "The
statement prepared with the help of ledger balances, at the end of financial
year (or at any other date) to find out whether debit total agrees with credit
total is called Trial Balance".
According to Rowlland, "The final
statement of balances, joint and mixed, is called Trial Balance".
Ideal definition, "On the basis of
different definitions given by different accountants at different times,
following ideal definition of trial balance can be adopted :
"According to double entry
system, after recording all the transactions into journal and posting them into
ledger and ascertaining their balances, the statement prepared to ascertain the
arithmetical accuracy of accounts on a certain date is called Trial Balance. It
is the statement, on the basis of which Trading, Profit and Loss Account and
Balance Sheet is prepared".
On analyzing the above definition
we obtain the following characteristics of Trial Balance :-
(1) According to double entry
system. after recording all transactions until all Ute business transactions are
journalized, and posted, strictly according to double entry system, a trial
balance can't be extracted.
(2) After finding out the
differences of debit and credit sides of all the ledger accounts :- All the
accounts opened in ledger totaled and balances (differences) are ascertained,
only then trial balance can be prepared.
(3) Prepared on a particular date :
Generally trial balance is prepared at the end of accounting year, but it can
also be prepared monthly, half yearly or
quarterly.
