Steps to prepare Trial Balance

 

Steps to prepare Trial Balance

Step 1: Understanding the Golden Rule of accounting: Understanding the Golden rules of accounting is vital. It helps in understanding which account needs to be debited and which needs to be credited. As per the golden rule, debit comes under Expenses and assets and credit under incomes, gains, and liabilities. Therefore, credit is payables, whereas debit is receivables.

 Step 2: Pass the journal entries: After making sure which account is debited or credited, a necessary journal entry is passed. If you are using Tally ERP 9, the entries get passed automatically when the amount is input.

Step 3: Once the journal entries get passed, post the entries into their respective ledgers. In the case of Tally ERP 9, this posting takes place automatically at the back end. If you are maintaining manual accounts, then post them manually into the respective accounts.

Step 4: In this step, all the ledgers get routed to the trial balance. If there is no arithmetical mistake, the debit and credit sides will match up. In case of any difference, record the same in the suspense account.