Here we detail about the three methods for preparing trial balance of an account, i.e.,(I) Balance Method, (II) Total Method, and (III)Balance and Total Method.
(I) Balance Method:
Under this method, debits and credits balances are to be extracted from all ledger accounts, including cash book and shown in this schedule.
The following steps shall be taken in preparation of Trial Balance:
Step 1:
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Calculate balances of all ledger accounts including cash book;
Step 2:
Write down debit balances under the head ‘Debit Balances’ and credit balances under the head ‘Credit Balances’;
Step 3:
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Write down the folio numbers (i.e. page numbers) from which these balances were taken under the head ‘L.F.’.
Step 4:
Total the debit and credit columns.
Format of Trial Balance (Balance Method):
Under balance method, Trial Balance can be prepared in the following format:
(II) Total Method:
Under this method, Trial Balance is prepared with the totals of each and every ledger accounts including cash book. It is worth mentioning that practically, this method is not commonly used because Trial Balance prepared through total method does not help in preparing final accounts of business enterprise.
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The following steps shall be taken in preparation of Trial Balance:
Step 1:
Calculate total of all ledger accounts including cash book;
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Step 2:
Write down debit totals under the head ‘Debit Totals’ and Credit totals under the head ‘Credit Totals’.
Step 3:
Write down the folio numbers (i.e. page numbers) from which these totals were taken under the head ‘L.F.’ columns.
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Step 4:
Total the debit and credit columns.
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Format of Trial Balance (Total Method):
Under total method, Trial Balance can be prepared in the following format:
(III) Balance and Totals Method:
Balance and Totals Method is a combination of Balance Method and Total Method.
The following steps shall be taken in preparation of Trial Balance:
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Step 1:
Total all ledger accounts including cash book;
Step 2:
Write down debit balances under the head ‘Debit Balances’ and credit balances under the head ‘Credit Balances’
Step 3:
Write down debit totals under the head ‘Debit Totals’ and credit totals under the head ‘Credit Totals’;
Step 4:
Write down the folio numbers (i.e. page numbers) from which these balances and totals were taken under the head ‘L.F.’ Columns.
Step 5:
Total debit and credit columns of balances and totals both.
Format of Trial Balance (Balance and Total Method):
Under balance and total method, Trial Balance can be prepared in the following format:
