Important Principle used in the Preparation of Trial Balance

 

Important Principle used in the Preparation of Trial Balance

1. All the nominal, personal, and real accounts are to be considered in preparing the Trial balance.

2. If a ledger shows a NIL balance, it is not considered in the preparation of the trial balance.

3. The purchase or consumption ledger always carries a debit balance and appears on the debit side of the trial balance.

4. The revenue account always carries a credit balance and appears on the credit side of the balance sheet.

5. Sales return and purchase return can appear as separate line items in the trial balance or be shown as reduced from the main purchase and sales ledger, respectively.

6. Opening stock figure comes from the Profit and loss account since it is not available as a closing balance of stock in the previous year's trial balance.

7. All the expenses generally carry a debit balance. Accordingly, they will appear with a debit balance in the trial balance.

8. All the incomes and gains generally carry a Credit balance. Accordingly, they will appear with a credit balance in the trial balance.

9. The asset and liability must tally at the end.