Basic Accounting Unit 2 Trial Balance

 

Trial Balance

1. Meaning of Trial Balance

A Trial Balance is a statement that contains the debit and credit balances of all ledger accounts prepared on a particular date.

It is prepared to check the arithmetical accuracy of the books of accounts.

In simple words, a Trial Balance is a statement that shows whether the total of debit balances is equal to the total of credit balances.

Definition:

Trial Balance is a statement prepared by listing the debit and credit balances of ledger accounts to check the arithmetical accuracy of accounting records.

Example

Suppose a business has the following ledger balances:

Account	Debit ₹	Credit ₹
Cash	20,000
Purchases	15,000
Furniture	10,000
Capital		30,000
Sales		15,000
Total	45,000	45,000

Since the debit and credit totals are equal, the Trial Balance agrees.

2. Objectives of Trial Balance

The main objectives of preparing a Trial Balance are:

1. Checking arithmetical accuracy: It checks whether total debit balances equal total credit balances.

2. Detection of errors: It helps identify certain accounting errors.

3. Preparation of final accounts: It provides information for preparing Trading Account, Profit and Loss Account and Balance Sheet.

4. Summary of ledger accounts: It provides a summary of all ledger balances.

5. Financial information: It helps understand the balances of different accounts.

6. Convenience: It makes preparation of financial statements easier.

7. Verification: It helps verify the mathematical accuracy of ledger posting and balancing.

3. Features or Characteristics of Trial Balance

1. It is a statement, not an account.

2. It is prepared after balancing ledger accounts.

3. It contains debit and credit balances.

4. It is prepared on a particular date.

5. It has two main columns: Debit and Credit.

6. The total of debit balances should equal the total of credit balances.

7. It helps in preparing final accounts.

8. It is usually prepared at the end of an accounting period, although it can also be prepared whenever required.

4. Format of Trial Balance

A Trial Balance generally contains the following columns:

• Serial Number

• Name of Account

• Ledger Folio (L.F.)

• Debit Amount

• Credit Amount

Standard Format

Trial Balance as on 31st March 2026

S. No.	Particulars	L.F.	Debit ₹	Credit ₹
1	Cash Account		XXXX
2	Bank Account		XXXX
3	Purchases Account		XXXX
4	Sales Account			XXXX
5	Capital Account			XXXX
6	Furniture Account		XXXX
	Total		XXXXX	XXXXX

The total of the debit column should be equal to the total of the credit column.

5. Methods of Preparing Trial Balance

There are three main methods of preparing a Trial Balance.

A. Total Method

Under this method, the total of the debit side and credit side of every ledger account is recorded in the Trial Balance.

Features:

• Both sides of ledger accounts are totalled.

• Debit totals are placed in the debit column.

• Credit totals are placed in the credit column.

• It checks the arithmetical accuracy of ledger totals.

B. Balance Method

Under this method, only the closing balances of ledger accounts are recorded.

Features:

• Debit balances are entered in the debit column.

• Credit balances are entered in the credit column.

• It is the most commonly used method.

• It is convenient for preparing final accounts.

C. Total and Balance Method

Under this method, both the totals and balances of ledger accounts are shown in the Trial Balance.

Features:

• It contains both total and balance information.

• It provides more detailed accounting information.

• It is less commonly used because it requires more work.

7. Steps for Preparing Trial Balance

The following steps are followed:

1. Prepare Journal Entries

   Record all business transactions in the journal.

2. Post Entries to Ledger

   Transfer journal entries to their respective ledger accounts.

3. Balance Ledger Accounts

   Calculate the debit or credit balance of each ledger account.

4. List All Accounts

   Write the names of all ledger accounts in the Trial Balance.

5. Enter Debit Balances

   Record all debit balances in the debit column.

6. Enter Credit Balances

   Record all credit balances in the credit column.

7. Calculate Totals

   Add both columns and compare the totals.

8. Example of Trial Balance with Solution

Question:

From the following balances, prepare a Trial Balance.

Particulars	Amount ₹
Cash	20,000
Capital	50,000
Purchases	30,000
Sales	40,000
Furniture	15,000
Salary	5,000
Creditors	10,000
Debtors	25,000
Rent	5,000

Solution

Trial Balance as on 31st March 2026

Particulars	Debit ₹	Credit ₹
Cash	20,000
Capital		50,000
Purchases	30,000
Sales		40,000
Furniture	15,000
Salary	5,000
Creditors		10,000
Debtors	25,000
Rent	5,000
Total	1,00,000	1,00,000

Trial Balance Agrees

Therefore, the total debit balance is equal to the total credit balance, which is ₹1,00,000.

9. Importance of Trial Balance

Trial Balance plays an important role in financial accounting.

1. It checks the mathematical accuracy of accounts.

2. It provides a summary of ledger balances.

3. It helps prepare final accounts.

4. It helps locate certain accounting errors.

5. It saves time in preparing financial statements.

6. It helps management review account balances.

7. It provides a basis for preparing the Balance Sheet.

8. It helps in checking the consistency of accounting records.

10. Advantages of Trial Balance

1. It is easy to prepare.

2. It helps check arithmetical accuracy.

3. It summarises all ledger balances in one statement.

4. It helps prepare Trading Account.

5. It helps prepare Profit and Loss Account.

6. It helps prepare Balance Sheet.

7. It helps identify certain posting and balancing errors.

8. It provides a convenient reference for accountants.

9. It makes accounting records more organised.

11. Limitations of Trial Balance

A Trial Balance is useful, but it has certain limitations.

1. Errors of omission: If a transaction is completely omitted, the Trial Balance may still agree.

2. Errors of commission: If an entry is posted to the wrong account but on the correct side and for the correct amount, the Trial Balance may agree.

3. Errors of principle: Recording a capital expenditure as a revenue expenditure may not affect the agreement of the Trial Balance.

4. Compensating errors: Two or more errors may cancel each other.

5. Complete reversal of entries: If debit and credit are reversed together, the Trial Balance may still agree.

6. Wrong amount in both accounts: If the same incorrect amount is posted on both sides, the Trial Balance may agree.

Important: Agreement of a Trial Balance does not guarantee that the books of accounts are completely error-free.

12. Errors Disclosed by Trial Balance

Errors disclosed by Trial Balance are errors that cause the debit and credit totals to differ.

Examples:

1. Posting an amount to the debit side instead of the credit side.

2. Posting an amount to only one side of an account.

3. Posting different amounts on debit and credit sides.

4. Incorrect addition of ledger accounts.

5. Incorrect balancing of ledger accounts.

6. Posting an amount to the wrong side of a ledger account.

Example

Suppose salary paid is ₹5,000.

Correct entry:

Salary A/c Dr. ₹5,000

To Cash A/c ₹5,000

If Salary Account is debited by ₹5,000 but Cash Account is also debited instead of credited, the Trial Balance will show a difference of ₹10,000.

13. Errors Not Disclosed by Trial Balance

These errors do not affect the equality of the debit and credit totals.

There are six important types.

A. Error of Omission

When a transaction is completely omitted from the books of accounts.

Example: Goods purchased for ₹10,000 are not recorded anywhere.

B. Error of Commission

When a transaction is recorded in the wrong account of the same category.

Example: Amount received from Ram is wrongly posted to Shyam's Account.

C. Error of Principle

When an accounting transaction is recorded against accounting principles.

Example: Purchase of machinery is recorded as a normal purchase expense.

D. Compensating Error

When two or more errors cancel each other.

Example: An account is over-debited by ₹1,000 and another account is under-debited by ₹1,000.

E. Complete Reversal of Entry

When the correct debit and credit accounts are reversed.

Example:

Correct entry:

Purchases A/c Dr. ₹5,000

To Cash A/c ₹5,000

Wrong entry:

Cash A/c Dr. ₹5,000

To Purchases A/c ₹5,000

F. Error of Original Entry

When an incorrect amount is recorded in the original entry and the same wrong amount is posted to both accounts.

Example: Goods purchased for ₹10,000 are recorded as ₹1,000 in both accounts.

14. Difference Between Trial Balance and Balance Sheet

Basis	Trial Balance	Balance Sheet
Meaning	Statement of ledger balances	Statement of financial position
Purpose	Checks arithmetical agreement	Shows assets, liabilities and capital
Preparation	Before final accounts	After preparing final accounts
Accounts	Personal, real and nominal balances	Assets, liabilities and capital
Debit/Credit	Two columns: debit and credit	Assets and liabilities/equity sections
Nature	Internal accounting statement	Financial statement
Mandatory	Not generally a statutory financial statement by itself	Required as applicable under law and accounting standards

15. Difference Between Journal, Ledger and Trial Balance

Basis	Journal	Ledger	Trial Balance
Meaning	Book of original entry	Principal book of accounts	Statement of ledger balances
Purpose	Recording transactions	Classifying transactions	Checking arithmetical agreement
Order	Date-wise	Account-wise	Account balance-wise
Preparation	First	After journalising	After ledger balancing
Format	Journal entries	Separate accounts	Debit and credit columns
Use	Initial recording	Determining account balances	Preparing final accounts

16. Suspense Account

A suspense account is a temporary account opened when the Trial Balance does not agree and the difference cannot immediately be identified.

The difference in the Trial Balance is temporarily placed in the suspense account until the errors are located and corrected.

Example

Suppose:

• Debit total = ₹1,00,000

• Credit total = ₹95,000

Difference:

$$1,00,000-95,000=\text{₹}5,000$$

A suspense account may temporarily be placed on the credit side for ₹5,000 to make the Trial Balance agree.

Once the errors are identified, the necessary rectification entries are passed and the suspense account is cleared.

Note: A suspense account does not correct the errors. It only temporarily records the difference.

17. Importance of Trial Balance in Final Accounts

Trial Balance provides the basic information required to prepare final accounts.

The accounting process is:

1. Journal – Recording transactions.

2. Ledger – Classifying transactions.

3. Trial Balance – Checking balances.

4. Trading Account – Calculating gross profit or gross loss.

5. Profit and Loss Account – Calculating net profit or net loss.

6. Balance Sheet – Showing financial position.

1. Meaning of Rectification of Errors

Rectification of errors means correcting mistakes committed while recording, posting, classifying or balancing business transactions in the books of accounts.

In accounting, errors may occur during journalising, ledger posting, preparation of Trial Balance or preparation of final accounts.

The process of identifying and correcting these mistakes is known as Rectification of Errors.

Definition:

Rectification of errors is the process of correcting accounting mistakes to ensure that the books of accounts show accurate and reliable financial information.

Example

Suppose salary paid ₹5,000 is wrongly debited to the Rent Account instead of the Salary Account.

Correct entry:

Salary A/c Dr. ₹5,000

To Cash A/c ₹5,000

Wrong entry:

Rent A/c Dr. ₹5,000

To Cash A/c ₹5,000

To rectify this error, we need to transfer ₹5,000 from Rent Account to Salary Account.

Rectification Entry:

Salary A/c Dr. ₹5,000

To Rent A/c ₹5,000

2. Objectives of Rectification of Errors

The main objectives are:

1. To correct mistakes in accounting records.

2. To maintain accuracy in the books of accounts.

3. To ensure that ledger accounts show correct balances.

4. To prepare an accurate Trial Balance.

5. To determine the correct profit or loss.

6. To show the correct financial position of the business.

7. To maintain reliable accounting information.

8. To prevent incorrect financial reporting.

3. Types of Accounting Errors

Accounting errors are mainly classified into two categories:

Classification of Accounting Errors

Accounting Errors

1. Errors Disclosed by Trial Balance

Cause debit and credit totals to differ.

2. Errors Not Disclosed by Trial Balance

May not affect debit and credit equality.

4. Errors Disclosed by Trial Balance

These are errors that cause the debit and credit totals of the Trial Balance to be unequal.

In other words, the Trial Balance does not agree due to these errors.

Types of Errors Disclosed by Trial Balance

1. Wrong Posting on One Side

When an amount is posted to the wrong side of a ledger account.

Example:

Salary paid ₹5,000.

Correct entry:

Salary A/c Dr. ₹5,000

To Cash A/c ₹5,000

If Salary Account is credited instead of debited, the Trial Balance will show a difference.

2. Posting Only One Side

When an entry is posted to only one account instead of both accounts.

Example:

Purchases ₹10,000 are debited to Purchases Account, but Cash Account is not credited.

The Trial Balance will not agree.

3. Wrong Amount Posted

When different amounts are posted on the debit and credit sides.

Example:

Purchases ₹5,000 are debited, but Cash Account is credited by ₹500.

Difference = ₹4,500.

4. Wrong Total of Ledger Account

When the debit or credit side of a ledger account is incorrectly totalled.

5. Wrong Balancing of Ledger Account

When the balance of an account is calculated incorrectly.

6. Posting to Wrong Side

When an amount that should be posted to the debit side is posted to the credit side or vice versa.

5. Errors Not Disclosed by Trial Balance

These errors do not affect the equality of the debit and credit columns.

Therefore, the Trial Balance may agree even though mistakes exist in the books of accounts.

There are six important types.

A. Error of Complete Omission

When a transaction is completely omitted from the books of accounts.

Example:

Goods purchased for cash ₹10,000 are not recorded anywhere.

Since both debit and credit entries are omitted, the Trial Balance will still agree.

Rectification: Record the omitted transaction.

Purchases A/c Dr. ₹10,000

To Cash A/c ₹10,000

B. Error of Commission

When a transaction is recorded in the wrong account of the same category.

Example:

Goods sold on credit to Ram ₹5,000 are wrongly debited to Shyam's Account.

Correct entry:

Ram A/c Dr. ₹5,000

To Sales A/c ₹5,000

Wrong entry:

Shyam A/c Dr. ₹5,000

To Sales A/c ₹5,000

Rectification Entry:

Ram A/c Dr. ₹5,000

To Shyam A/c ₹5,000

C. Error of Principle

When a transaction is recorded against the basic principles of accounting.

Example:

Machinery purchased for ₹20,000 is wrongly debited to Purchases Account.

Correct entry:

Machinery A/c Dr. ₹20,000

To Cash A/c ₹20,000

Wrong entry:

Purchases A/c Dr. ₹20,000

To Cash A/c ₹20,000

Rectification Entry:

Machinery A/c Dr. ₹20,000

To Purchases A/c ₹20,000

D. Compensating Error

When two or more errors cancel the effect of each other.

Example:

Salary Account is over-debited by ₹1,000 and Rent Account is under-debited by ₹1,000.

The total debit and credit balances may still agree.

E. Error of Original Entry

When an incorrect amount is recorded in the original entry and the same incorrect amount is posted to both accounts.

Example:

Goods purchased for ₹10,000 are recorded as ₹1,000 in both Purchases Account and Cash Account.

Rectification requires recording the difference of ₹9,000:

Purchases A/c Dr. ₹9,000

To Cash A/c ₹9,000

F. Complete Reversal of Entry

When the correct debit and credit accounts are reversed.

Example:

Correct entry:

Purchases A/c Dr. ₹5,000

To Cash A/c ₹5,000

Wrong entry:

Cash A/c Dr. ₹5,000

To Purchases A/c ₹5,000

Rectification entry:

Purchases A/c Dr. ₹10,000

To Cash A/c ₹10,000

Why ₹10,000?

• Purchases Account needs an additional debit of ₹5,000 to cancel the wrong credit and create the correct debit.

• Cash Account needs an additional credit of ₹5,000 to cancel the wrong debit and create the correct credit.

Therefore, the correction amount is double the original amount.

6. Meaning of Rectification Entry

A rectification entry is a journal entry passed to correct an accounting error.

It may involve:

• Correcting the wrong account.

• Reversing an incorrect entry.

• Recording an omitted transaction.

• Adjusting an incorrect amount.

Example

Goods purchased for cash ₹8,000 were wrongly recorded in the Sales Account.

Correct entry:

Purchases A/c Dr. ₹8,000

To Cash A/c ₹8,000

Wrong entry:

Sales A/c Dr. ₹8,000

To Cash A/c ₹8,000

Rectification Entry:

Purchases A/c Dr. ₹8,000

To Sales A/c ₹8,000

7. Methods of Rectification of Errors

There are three important methods of rectification.

Method 1: Before Preparation of Trial Balance

If an error is identified before preparing the Trial Balance, it can be corrected directly in the ledger or through an appropriate correcting entry.

Example:

Salary ₹5,000 wrongly posted to Rent Account.

Correction:

Salary A/c Dr. ₹5,000

To Rent A/c ₹5,000

Method 2: After Preparation of Trial Balance but Before Final Accounts

When an error is discovered after preparing the Trial Balance but before final accounts, it is corrected through rectification entries.

If the Trial Balance difference cannot immediately be located, a Suspense Account may be opened temporarily.

Method 3: After Preparation of Final Accounts

When errors are discovered after final accounts have been prepared, correction depends on the nature of the error and the applicable accounting framework.

For errors relating to previous periods, material errors are generally corrected retrospectively in accordance with the applicable accounting standards.

In traditional examination problems, a Profit and Loss Adjustment Account may be used for certain past-period errors.

8. Rectification Through Suspense Account

A Suspense Account is a temporary account opened when the Trial Balance does not agree and the reason for the difference is not immediately known.

The difference is temporarily recorded in the Suspense Account.

Example

Suppose:

• Debit Total = ₹1,00,000

• Credit Total = ₹95,000

Difference:

$$1,00,000-95,000=\text{₹}5,000$$

The debit side is greater by ₹5,000.

Therefore, a Suspense Account is temporarily credited with ₹5,000.

Journal Entry

Suspense A/c Dr. ₹5,000

To Trial Balance Difference / Temporary balancing adjustment as applicable.

In practical accounting, the Trial Balance is balanced by entering Suspense Account on the shorter side; this is a provisional balancing step, not a normal correction of an identified transaction.

Example of Rectification Using Suspense Account

Salary ₹3,000 paid was correctly entered in Cash Book but was not posted to Salary Account.

The error causes the debit side of the Trial Balance to be short by ₹3,000.

Rectification Entry:

Salary A/c Dr. ₹3,000

To Suspense A/c ₹3,000

After rectification, the Suspense Account will be reduced by ₹3,000.

9. Difference Between Errors Disclosed and Not Disclosed by Trial Balance

Basis	Disclosed Errors	Undisclosed Errors
Meaning	Errors that cause Trial Balance disagreement	Errors that may not affect Trial Balance agreement
Effect	Debit and credit totals differ	Debit and credit totals may remain equal
Detection	Often detected during Trial Balance checking	May require detailed examination
Examples	One-sided posting, wrong-side posting	Omission, principle, compensating error
Correction	Correct the incorrect posting or balance	Pass appropriate rectification entries

10. Important Rectification Entries for BBA

These examples are very important for numerical examinations.

No.	Error	Rectification Entry
1	Salary wrongly debited to Rent Account ₹5,000	Salary Dr. ₹5,000; To Rent ₹5,000
2	Machinery wrongly debited to Purchases ₹20,000	Machinery Dr. ₹20,000; To Purchases ₹20,000
3	Goods sold to Ram wrongly posted to Shyam ₹4,000	Ram Dr. ₹4,000; To Shyam ₹4,000
4	Furniture purchase wrongly debited to Purchases ₹10,000	Furniture Dr. ₹10,000; To Purchases ₹10,000
5	Complete omission of rent paid ₹2,000	Rent Dr. ₹2,000; To Cash ₹2,000
6	Complete reversal of purchases ₹5,000	Purchases Dr. ₹10,000; To Cash ₹10,000

11. Numerical Problems with Solutions

Question 1: Wrong Account Debited

Salary paid ₹6,000 was wrongly debited to Rent Account. Pass the rectification entry.

Solution:

Correct account = Salary Account.

Wrong account = Rent Account.

Rectification Entry:

Salary A/c Dr. ₹6,000

To Rent A/c ₹6,000

(Being salary wrongly debited to Rent Account corrected.)

Question 2: Error of Principle

Machinery purchased for ₹25,000 was wrongly recorded in Purchases Account. Pass the rectification entry.

Solution:

Machinery A/c Dr. ₹25,000

To Purchases A/c ₹25,000

Question 3: Complete Omission

Goods purchased for cash ₹12,000 were completely omitted from the books.

Solution:

Purchases A/c Dr. ₹12,000

To Cash A/c ₹12,000

Question 4: Complete Reversal

Goods sold for cash ₹8,000 were wrongly recorded as:

Cash A/c Dr. ₹8,000

To Sales A/c ₹8,000

However, the correct entry should have been the same.

Instead, consider the following incorrect entry:

Sales A/c Dr. ₹8,000

To Cash A/c ₹8,000

Pass the rectification entry.

Solution:

Correct entry:

Cash A/c Dr. ₹8,000

To Sales A/c ₹8,000

Rectification Entry:

Cash A/c Dr. ₹16,000

To Sales A/c ₹16,000

Question 5: Wrong Posting to Personal Account

Goods sold on credit to Ram ₹10,000 were wrongly posted to Shyam's Account.

Solution:

Ram A/c Dr. ₹10,000

To Shyam A/c ₹10,000

12. Difference Between Error of Omission and Error of Commission

Basis	Error of Omission	Error of Commission
Meaning	Transaction is completely or partially omitted	Transaction is recorded incorrectly
Nature	Missing entry	Wrong entry or posting
Example	Purchase transaction not recorded	Ram's transaction posted to Shyam
Effect on Trial Balance	Complete omission usually does not affect agreement	Depends on the nature of the error
Rectification	Record the omitted entry	Correct the wrong entry or account

13. Difference Between Error of Principle and Error of Commission

Basis	Error of Principle	Error of Commission
Meaning	Violation of accounting principles	Mistake in recording or posting
Nature	Incorrect classification	Incorrect account or amount
Example	Machinery recorded as purchases	Ram's account posted to Shyam
Trial Balance	May agree	May agree or disagree
Correction	Transfer to the correct category	Correct the affected account

14. Important Rules for Solving Rectification Questions

Remember these rules while solving numerical questions:

1. First identify the correct journal entry.

2. Then identify the incorrect entry actually passed.

3. Compare both entries.

4. Determine which account needs to be debited.

5. Determine which account needs to be credited.

6. Calculate the difference between the wrong and correct amounts.

7. Pass the rectification entry.

Golden Rule: Never pass a rectification entry without first identifying what was originally recorded and what should have been recorded.

15. Practice Questions for BBA Students

Try these questions yourself and reveal the answers to check your understanding.

Rectification Practice Test

6/6 completed

Q1. Salary paid ₹5,000 was wrongly debited to Rent Account. Pass the rectification entry.

Salary A/c Dr. ₹5,000; To Rent A/c ₹5,000.

Q2. Machinery purchased for ₹15,000 was wrongly debited to Purchases Account. Pass the rectification entry.

Machinery A/c Dr. ₹15,000; To Purchases A/c ₹15,000.

Q3. Goods purchased for cash ₹8,000 were completely omitted. Pass the rectification entry.

Purchases A/c Dr. ₹8,000; To Cash A/c ₹8,000.

Q4. Goods sold to Ram ₹6,000 were wrongly posted to Shyam's Account. Pass the rectification entry.

Ram A/c Dr. ₹6,000; To Shyam A/c ₹6,000.

Q5. Cash received from Mohan ₹10,000 was wrongly credited to Sohan's Account. Pass the rectification entry.

Sohan A/c Dr. ₹10,000; To Mohan A/c ₹10,000.

Q6. Purchases ₹5,000 were completely reversed with Cash Account. Pass the rectification entry.

Purchases A/c Dr. ₹10,000; To Cash A/c ₹10,000.

16. Important Questions for BBA Examinations

Short Answer Questions (2–5 Marks)

1. Define rectification of errors.

2. What is an error of omission?

3. What is an error of commission?

4. What is an error of principle?

5. What is a compensating error?

6. What is a Suspense Account?

7. What is a rectification entry?

8. What are errors disclosed by Trial Balance?

Long Answer Questions (8–10 Marks)

1. Explain the meaning, objectives and importance of rectification of errors.

2. Explain different types of accounting errors with examples.

3. Differentiate between errors disclosed and not disclosed by Trial Balance.

4. Explain the methods of rectification of errors.

5. What is a Suspense Account? Explain its treatment with examples.

6. Pass rectification entries for different accounting errors.

18. Important Short Questions and Answers for   Exams

Q1. What is Trial Balance?

Trial Balance is a statement containing the debit and credit balances of all ledger accounts prepared to check the arithmetical accuracy of accounting records.

Q2. What is the main objective of Trial Balance?

Its main objective is to check whether the total debit balances are equal to the total credit balances.

Q3. Is Trial Balance an account or a statement?

Trial Balance is a statement, not an account.

Q4. When is Trial Balance prepared?

It is prepared after posting and balancing ledger accounts.

Q5. What is the total method?

Under this method, the total of both debit and credit sides of each ledger account is recorded.

Q6. What is the balance method?

Under this method, only the closing balances of ledger accounts are recorded.

Q7. What is a suspense account?

It is a temporary account used to record the difference when the Trial Balance does not agree.

Q8. Does agreement of Trial Balance guarantee accuracy?

No. Some accounting errors do not affect the equality of debit and credit totals.

Q9. What is an error of omission?

It occurs when a transaction is completely left out of the accounting records.

Q10. What is a compensating error?

It occurs when two or more errors cancel the effect of each other.

19. Important Numerical Questions for  Practice

Try these questions to test your understanding.

Trial Balance Practice Test

4/5 completed

Q1. Cash ₹20,000, Purchases ₹30,000, Furniture ₹10,000, Capital ₹40,000 and Sales ₹20,000. Calculate total debit and credit.

Debit = ₹60,000; Credit = ₹60,000.

Q2. Debit total is ₹80,000 and credit total is ₹75,000. Calculate the difference.

₹5,000. A credit-side suspense balance of ₹5,000 may temporarily balance the statement.

Q3. Purchases ₹50,000, Sales ₹70,000, Rent ₹5,000, Cash ₹15,000 and Capital ₹10,000. Does the Trial Balance agree?

Q4. A transaction of ₹5,000 is completely omitted from the books. Will the Trial Balance agree?

Yes. Complete omission does not affect the equality of debit and credit totals.

Q5. Machinery purchased for ₹20,000 is wrongly debited to Purchases Account. Will Trial Balance agree?

Yes, if the correct credit entry is made. This is an error of principle.