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What Is The Importance Of Methods Of Preparing Trial Balance?
It is a very important concept for accounts and finance students. So they should know about this topic in detail as it is highly useful and interconnected with other topics as well. Our team will ensure that with Methods of Preparing Trial Balance Assignment Help you are able to complete your work on time and all your doubts get cleared completely.
Let us see the importance of this topic for students-
- A trial balance is the list of all the balances of various ledger accounts and everything is arranged either on the debit side or on the credit side depending on the nature of ledger account closing balance.You can also say that it is the first step in preparing financial statements.
- The total of debit side should match with credit side, if the total of both sides does not match then there are certainly some errors and they should be checked before proceeding to prepare financial statements.
- There can be various methods of preparing trial balance such as total method, the balance method and the compound method.
- In total method the total of credit and debit of all the ledger accounts is taken to prepare the trial balance.
- In the balance method only the balance of all the ledger accounts is taken to make the trial balance.
- In the compound method you can use the combination of above mentioned methods and it is also known by the name total cum balance method.
- Trial balance is very important to understand as it is the fundamental base of accounting which helps in preparation of financial statements. It acts like a summary of the financial transactions of a business entity in an accounting period. It helps in checking the arithmetical accuracy of financial information and locating the errors.
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