Trial balance

What is Trial Balance

Pu. Trial balance is basically a summary of different account activities and therefore this summary is provide the required information for the preparation of balance sheet and profit and loss.

What are Types of Trial Balance

There are mainly three types of trial balance

1. Un- Adjusted Trial Balance

There are number of adjustment which are entered at the year end. Therefore a trial balance prepared before those adjustment is known as Un adjusted trial balance. This trial balance is just an initial summary of the all account balances.

2. Adjusted Trial Balance

The Trial balance which is prepared after the year end adjustment is known as adjusted trial balance.

3.Post Closing Trial Balance

The adjusted trial balance many account which related to income and expense are closed and only assets and liabilities account are left. This trial balance which contains only the asset and liabilities account summary is known as post closing trial Balance.

Advantages of Trial Balance

There are some advantages of preparing the trial balance.

1. Missing Head of Account 

The first review of trial balance may detect any missing items in the trial balance because the both side of trial balance must be equal and therefore in case of inequality something is missing.

 2. Mistake Detection

The other important advantage of trial balance that it identify a number of possible error in the recording process. those error include the errors like single entry , transposition errors, double impact on one side, and casting error.

Trial balances however is unable to detect the error of principle, omitted error and compensating errors.if the trial balance is tele mean when the debit side is equal to credit side it gives us surety that there is no transposition error , single effect error or double entry of same aspect error.

What is Suspense Account

There is a situation where the trial balance is imbalance but we are unable to locate the error then we may create a suspense account and put the difference in the suspense account. However, the suspense account is only a temporary solution for the preparation of financial statement.It is highly recommended that difference must be worked out and corrected.