- Trial Balance (by debit and credit balances method)
9.1. For every debit entry there will be a corresponding credit entry. Taking all
the ledger accounts into consideration, the total of debit balances must be
equal to the total of credit balances. Only for clerical errors it may not tally.
Otherwise it must tally.9.2. At the end of the accounting year all the ledger accounts will be balanced. If
it is a debit balance it will taken to debit column of trial balance. If it is a
credit balance, it will be taken to the credit column of trial balance.9.3. Before preparing final accounts, preparation of trial balance statement is a
must.9.4. The columns of the Trial balance are :-? Particulars
? Ledger folio
? Debit-column
? Credit Column
? Total of debit and credit columns- Trading Account:
10.1. The Trading Account shows the gross profit. Gross profit means :[A] Proceeds of the sale of goods
(Minus)
[B] Cost of the goods
10.2. The cost of the goods does not include establishment expenses.10.3. Here the cost of the goods means expenses directly related to cost of the
goods sold. This point must be made clear in the accounting policy of
Board/ organisation/ business firm. In other the organisation/board/ business
firm must clarify which items are to be included in the cost of the goods sold.
Similarly, items that are not being included in the cost of the goods sold
should also be indicated.10.4. The following are to be considered on the debit side of the Trading Account:a) Opening stock (at the beginning of the Accounting Year)b) Purchase of goods i.e., goods purchase in a given Accounting year minus
goods returned (also known as Returns Outwards)