Trial Balance - A Starting Point
for Final Accounts:
balance is simply a list of
accounts balances at the end of an accounting
period. This summary of the ledger at the end of an
accounting period, is a convenient starting point in
the preparation of the final accounts i.e. trading
and profit and loss account and balance sheet.
balance usually contains the following types of
Balances from expenses accounts
Balances from revenue accounts
Balances from assets accounts
from liabilities accounts
from capital or owner's equity account
The first two
types of balances are transferred to trading and profit and
loss account to find out profit or loss.
three types of balances are transferred to the balance sheet
to know the financial position of the business.
prepare from the
trial balance a trading and profit and loss account by
matching revenue balance with expenses balances and by the
time we have finished, we have very much smaller
which is then arranged into a balance sheet.
= Revenue - All expenses