d Meaning of voucher trial balance balance sheet in business studies
  •  Meaning of voucher trial balance balance sheet in business studies
  •  Meaning of voucher trial balance balance sheet in business studies
  •  Meaning of voucher trial balance balance sheet in business studies

Meaning of voucher trial balance balance sheet in business studies

Voucher

Voucher is a document in accounting containing the details of a financial transaction. Examples include sales invoice, purchase invoice, pay-slip, rent receipt & so on. In a journal, several entries are recorded, each of which is unrelated to the other. To know the total effect of all the transactions, each journal entry must be moved transferred to the account it relates to.

Account

It is a statement of transactions affecting any particular asset, liability, expense or income. A ledger is the book in which all the accounts are maintained. A chart of accounts is a list of all account titles used by an organisation. The chart of accounts of the business shows the categorisation & grouping of its accounts.

Meaning of Posting

 Posting is the process by which information about transactions is transferred or moved to an account.

Financial Period

 A regular period of time, such as a quarter or a year, for which a financial statement is generated is called an accounting period.

Meaning of Trial Balance

 After posting the accounts in the Ledger, a statement is prepared to show separately the debit and credit balances. Such a statement is known as Trial Balance. It may also be prepared by listing each and every accounts and entering in separate columns the totals of the debit and credit sides. Whichever way it is prepared, the totals of the two columns should agree. An agreement indicates reasonable arithmetical acoustical of the accounting work. If the two sides do not agree, there is definitely some error. We should remember that equalizing the two sides of a Trial Balance is not the sole and conclusive proof of the complete correctness of accounting work.

Objects of a Trial Balance

A Trail Balance is a list of accounts showing debits balances and credit balances. If the Trial Balance agrees it proves:

  • That the accounts are arithmetically accurate,
  • That both aspects of all the transactions have been correctly recorded
  • Both the debit and credit entries are passed in the ledger.

A Trial Balance facilitates the preparation of final accounts, i.e., the Trading Account, the Profit and Loss Account and the Balance Sheet.

Methods of Preparing the Trial Balance

There are two methods of preparing a Trail Balance:

  • Total Method. In this method, the total of debit and credit sides of the ledger accounts, excluding the closing balances are shown in the Trial Balance.
  • Balance Method. Only the closing balances of the ledger accounts are shown in the Trial Balance.

Read more about ratio in accounting course offered by IPA

  • Account name Debit balance Credit balance