Page 114 - DCOM101_FINANCIAL_ACCOUNTING_I

Financial Accounting-I

Notes 2. To prepare a statement of cross checking device of accounting, while in the process of
posting of entries which mainly on the basis of Double entry accounting principle. It helps
the accountant to have systematic posting of entries.

3. It assists the enterprise for the preparation of Trading & Profit and Loss Accounts for the
year ended…………….. and the Balance sheet as on dated ………………..
4. It provides a birds' eye view of accounting balances of various ledger accounts during the
specifi ed period.
10.2 Preparation of Trial Balance

The preparation of the trial balance is classified on the basis of three different accounts, viz:
1. Real Account (R)
2. Nominal Account (N)
3. Personal Account (P)

The classification of the transactions is done not only on the basis of accounts but also on the

basis of payments and receipts. These payments and receipts are further classified into following
categories:
Payments Category – Debit Balance

Debit Balance is the source of following golden rules of the three different accounts:
Personal Account: Debit the Receiver
Nominal Account: Debit all the expenses and losses
Real Account: Debit what comes in and Debit all assets
1. Trading Expense Category (TE)

2. Profit and Loss Category (PE)

3. Assets - Balance Sheet (BA)

Receipts Category – Credit Balance

Credit Balance is the major source of the other half of the golden rules of accounting
Personal Account: Credit the Giver
Nominal Account: Credit all income and gains
Real Account: Credit what goes out and Credit all liabilities
1. Trading Income Category (TI)

2. Profit and Loss Category (PI)
3. Liabilities - Balance Sheet (BL)
The given below is the proforma of trial balance:

Trial Balance
as on ……………………
S.No. Particulars L.F. Debit Balance (`) Credit Balance (`)

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