Errors Disclosed by a Trial Balance
Generally due to these errors a difference between both the side of trail balance is found
1.The errors while posting in ledger, as-posting is done in wrong side of any account or by a wrong amount.
2.To forget writing balance of any account in trial balance or to be written as a wrong amount.
3.Error is made in getting total of cash book or other subsidiary book; or in carrying forward the total.
4.To forget writing the balance of cash book in trial balance.
5.The error done in making the list of creditor and debtors.
6.Error done in getting the total of trial balance.
Errors Not Disclosed by a Trial Balance
There are some errors of such type which remain in trial balance inspite of being equal in total. These are called the errors not disclosed by a Trial Balance. These errors are as follows-
(1) Errors of omission- If any transaction is omitted due to forgetfulness from subsidiary books or primary book,it will have no effect on matching of trial balance. For example-if the entry of Rs. 800 of cash sales is not recorded in primary book, then its posting will not be done in ledger…Thus this transaction will affect both the sides of trial balance by an equal amount and the matching of trial balance will be unaffected.
(ii) The errors made in primary accounts- If any
transaction is entered with a wrong amount while writing in primary accounting book, then also it will have no effect on matching of trial balance. For example-Goods purchasing of Rs. 4000 from Eshan is written Rs. 400 only due to mistake.
(iii) The errors of posting- If some amount is written in a wrong account but in a right side while posting in accounts from primary books or original records book, then also it will have no effect on matching of trial balance. For example-some amount which should be written in credit side of Ishan is recorded in credit side of Gourav due-to error.
(iv) Theoretical errors-If any mistake is done due to lack of proper knowledge of double entry system, it is called theoretical error. For example-if furniture purchases is written in purchases book. This also doesn’t affect on matching of trial balance.
(v) Compensational errors- Sometimes a single
amounts makes two different types of errors, then one mistake ends the effect of another mistake, and so the total of both the sides of trial balance is found equal. For example-if the total of credit side of Rikki’s account is more in excess by Rs. 200 due to error; and if the total of debit side of Shanky’s account is also in excess by Rs. 200 then this second error will compensate the first error and the total of trial balance will be equal.
Thus we can say that the above given errors may
remain in trial balance inspite of its matching, so trial balance is not the conclusive proof of accuracy of accounts.
Characteristics of Trial Balance
1.It is a statement prepared in a tabular form. It has two columns one for debit balance and another for credit balance.
2.Closing balances, i.e., balances at the end of the period as shown by ledger accounts, are shown in the statement.
3.Trial balance is not an account. It is only a statementbof balances.
4.It can be prepared on any date provided accounts are balanced.
5.It is a method of verifying the arithmetical accuracy of entries made in the ledger.
6.With its help final A/c’s are prepared.
Limitations of Trial Balance
1.Trial, balance is only a statement and not account.
2.By preparing Trial Balance, we can come to know the balances of various accounts only. It does not give any information about profit or loss made by firm.
3.It is not a final proof of accuracy. There may be errors even if trial balance agreed.