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Trial Balance
Are you facing difficulty in understanding the crux of the trial balance? I would like to help you by providing the meaning followed by items to be included on either side of the trial balance.
Meaning
The term trial balance refers to as the total of all the general ledger balances. It is a statement prepared at a certain period to check the arithmetic accuracy of the accounts (i.e., whether they are mathematically correct and balanced). It contains a list of all the general ledger accounts.
Trading account, Profit and Loss account and Balance Sheet are prepared according to the ledger balances as posted in the trial balance.
Now its time to learn about the various items which are placed on either side of the trial balance.
Items that appear on the debit side of trial balance
Generally, assets and expenses have a positive balance so they are placed on the debit side of trial balance. An asset and expense increases when it is debited and visa versa
Exclusive List of Items
Items that appear on the credit side of trial balance
Generally capital, revenue and liabilities have credit balance so they are placed on the credit side of trial balance. The capital, revenue and liability increases when it is credited and visa versa.
Exclusive List of Items