The Trial Balance
Chapter Forty-Two
Syllabus topic 8, "Preparation of Trial balance."
Pages 93 to 94 of 110
In one line
A trial balance is a list of the balances standing in the farm's ledger on a given date, debits in one column and credits in the other, prepared to check that the two columns agree.
Why a farm prepares one
- To prove the arithmetical accuracy of the ledger.
- To bring every balance together on one sheet, so the final accounts can be prepared from it.
- To locate errors before the accounts are drawn.
- To provide the summary from which the trading account, the profit and loss account and the balance sheet are written.
It is not an account. It is a list, it has no debit and credit sides in the accounting sense, and it does not form part of the final accounts. It is the working paper from which they are made.
How it is extracted
Every ledger account is balanced, and the balance is carried to the appropriate column.
| Balance | Column |
|---|---|
| Assets: land, deadstock, livestock, stock, debtors, cash, bank | Debit |
| Expenses: wages, seed, fertiliser, feed, repairs, interest, rent | Debit |
| Drawings | Debit |
| Purchases | Debit |
| Liabilities: creditors, loans, outstanding expenses | Credit |
| Capital | Credit |
| Income: sales of crops, milk and livestock, hire, rent received | Credit |
| Accumulated depreciation, provisions, reserves | Credit |
The rule in one line: assets, expenses, losses and drawings are debits; liabilities, capital, income and gains are credits.
Shivneri Farm's trial balance
Shivneri Farm, Baramati. Trial balance as at 31 March 2027.
| Particulars | Dr Rs. | Cr Rs. |
|---|---|---|
| Capital | 34,00,000 | |
| Drawings | 2,40,000 | |
| Land, at cost | 18,00,000 | |
| Deadstock, at cost | 13,89,000 | |
| Accumulated depreciation on deadstock | 3,93,075 | |
| Livestock, at 1 April 2026 | 11,60,000 | |
| Opening stock of produce | 1,84,000 | |
| Opening stock of stores | 96,000 | |
| Purchases of seed, fertiliser and pesticide | 3,42,000 | |
| Wages, field labour | 5,86,000 | |
| Salaries, regular staff | 3,84,000 | |
| Irrigation and electricity | 1,12,000 | |
| Diesel and fuel | 78,000 | |
| Cattle feed purchased | 1,64,000 | |
| Veterinary charges | 22,000 | |
| Repairs to implements | 46,000 | |
| Land revenue and cess | 6,840 | |
| Lease rent | 42,000 | |
| Insurance | 28,000 | |
| Interest on crop loan | 34,000 | |
| Transport and market expenses | 64,000 | |
| Sundry farm expenses | 34,935 | |
| Sale of sugarcane | 12,60,000 | |
| Sale of cotton | 8,40,000 | |
| Sale of jowar and vegetables | 2,16,000 | |
| Sale of milk | 3,64,000 | |
| Sale of livestock | 1,10,000 | |
| Sundry debtors | 1,42,000 | |
| Sundry creditors | 1,86,000 | |
| Crop loan | 1,50,000 | |
| Term loan | 4,00,000 | |
| Cash in hand | 46,300 | |
| Bank | 3,18,000 | |
| Total | 73,19,075 | 73,19,075 |
Every figure in it came from a record in Unit III. Wages from the muster roll, purchases from the receipt register and the cashbook, opening stock from the stock book, deadstock and its accumulated depreciation from the deadstock register, land revenue and lease rent from the general register, cash and bank from the cashbook.
What the trial balance proves, and what it does not
It proves that for every debit posted there was an equal credit, and that the additions and the balancing are right.
The rest of this chapter
Module one is free. The rest of this chapter comes with the B.Com. (Accountancy) Semester 1 notes.
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The rest of this subject
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