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Trial Balance – Preparation, Uses, Advantages and Limitations

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Trial balance is a type of report that lists closing balances of each ledger account. Trial balance is the first step towards the creation of a financial statement. It is created at the end of an accounting period.

Ledger balance are distributed into debit and credit balances. The purpose of creating a trial balance is to check the arithmetical accuracy between debit and credit sides. Ideally, the credit and debit balance will be tallying if proper entry is done.

Preparation of Trial Balance

It involves the following steps:

  • All the Ledger Accounts are closed at the end of an accounting period.
  • Ledger balances are posted into the trial balance.
  • Trial Balance is cast, and the errors are identified.
  • A suspense account is created for agreeing to the trial balance temporarily until corrections are accounted for.
  • Errors identified are then rectified by posting of corrective entries.
  • Any such adjustments that are
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