PREPARATION OF THE TRIAL BALANCE - Accounts and Finance for Managers

The preparation of the trial balance is classified on the basis of three different accounts viz

  • Real Account (R)
  • Nominal Account (N)
  • Personal Account (P)

The classification of the transactions not only on the basis of accounts but also on the basis of payments and receipts. These payments and receipts classification further segmented into following categories
Payments category - Debit Balance
Debit Balance is the source of following golden rules of the three different accounts
Personal Account - Debit the Receive
Nominal Account-Debit all the expenses and losses

Real Account - Debit what comes in & Debit all assets

  • Trading Expense Category (TE)
  • Profit and Loss Category (PL)
  • Assets- Balance Sheet (BA)

Receipts category-Credit Balance
Credit Balance is the major source of other half of the golden rules of accounting
Personal Account-Credit the Giver
Nominal Account- Credit all income and gains

Real Account- Credit what goes out & Credit all liabilities

  • Trading Income Category (TI)
  • Profit and Loss Category (PL)
  • Liabilities - Balance Sheet (BL)

The following trial balance of the Sundar firm is prepared from the previous list of journal entries and ledger accounting balances.


From the Table above, it is obviously understood that the total amount of debit balances are equated to the total of credit balances of the enterprise.

The above statement of accounting balances are the resultant out of the ledger accounts which is easier in preparation only at the moment, the firm has limited number of transactions. Prepare trial balance from the following text of information extracted from the book of accounts of Ms. Selvi.

Ms Selvi has brought a monetary capital of Rs. 1,00,000 for the conduct of business on 1st April, 2007. The brought capital was converted into real capital for the business in the form of tradable goods and commodities. She purchased household articles for trade which amounted Rs. 60,000. She has bought a service vehicle for Rs 1,500. She keeps Rs. 20,000 in the form of deposit at bank for contingencies. The remaining balance is kept in the form of cash in hand for meeting the day today expenses.

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