Objectives and limitations of the Trial balance

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Objectives of Trial Balance:-

  The preparation of trial balance has the following objectives.


1) Trial Balance enables one to establish whether the posting and other Accounting processes have been carried out without committing arithmetical errors.


2) Financial statements are normally prepared on the basic of agreed trial balance, otherwise the work may be cumbersome. Preparation of financial statements therefore is the second objective.


3) The trial balance serves as a summary of what is contained in the ledger., the  ledger may have to be seen only when details are required in respect of an account.


   The form of the trial balance is simple and as shown below:

          Trial balance as at.....





Some important points to be noted are as follows:


1) A trial balance is prepared as on a particular date which should be mentioned at the top.


2) in the second column the name of the account is written.


3) in the fourth column the total of the debit side of the account concerned or the debit balance, if any is entered.


4) in the next column, the total of the Credit side or the Credit balance is written.


5) The two columns are totaled at the end.


Limitations of Trial Balance:-

  Once should note that the agreement of trial balance is not a conclusive proof of accuracy. In spite of the agreement of the trial balance some errors may remain. These may be of the following types.


1) Transaction has not been entered at all the journal.


2) wrong amount has been written in in both column of the journal.


3) A wrong amount has been mentioned in the journal.


4) An  Entry has not at all been posted in the ledger.


5) Entry is posted twice in the ledger.




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