Rectification of Incorrect Trial Balance
Incorrect Trial Balance means such trial balance
whose total of both the sides is equal yet its all items are not written on proper places. Some items which should be written in debit side are written in credit side and some items are written in debit instead of credit, and some items may be written correctly also. To write such trial balance properly, the rules given ahead should be obeyed:
(1) Generally we are not able to memorize all the items of debit or credit side of Trial balance but we remember the items of credit and debit of trading and profit and loss accounts. In the same way we remember this also that which items are written in assets and liabilities side of balance sheet.On the basis of the items of both the accounts balance sheet can be corrected. For this there are two main important rules-
(i) The Trading and Profit and Loss accounts are
similar to Trial balance. It means the items which are written in debit side of Trading and Profit and Loss accounts, belong to debit side of trial balance also; and the items which are recorded in credit side of trading and profit and loss account are written in credit side of Trial balance also. Ex-cept those which are reduced in trading and profit and lossbA/c. In it there are three important items-Purchases Returnes Sales Returnes and previous year’s balance of Reserve for doubtful debts. All these three are taken contrary to this rule, means purchases returnes in credit side of trial balance, sales returns in debit side and reserve for doubtful debts is in credit side.
(ii) Balance sheet moves contrary to trial balance,
means the items which come in assets side, belong to credit side of trial balance, and the items which come in liabilities side of balance sheet; they belong to credit side of Trial balance except those which are substracted in balance sheet.In it there is an item named drawings. It is deducted in liabilities side of balance sheet so it is found only in credit side in trial balance.
(2) Generally final stock is written in adjustment only, but if its general entry has been made, then it is written in debit side in trial balance. If in the question of trial balance correction final stock is also given in trial balance then after writing all the other items of trial balance correctly, it should be observed whether the total of trial balance is equal. If the total of both the sides is equal, then final stock should not be written in trial balance, but if the total of debit side of trial balance is less as equal to the amount of final stock then final stock should be written in debit side of trial balance.
(3) Accounting of Outstanding expenditures- If in
incorrect trial balance the out-standing expenditures asOutstanding salary, outstanding wages etc. are given, and since these are written in liability side of balance sheet, so they should be entered in credit side of trial balance. 19
(4) Accounting of pre-paid expenditures- If pre-paid expenditures are given in an incorrect trial balance, and since these items are recorded in assets side of balance sheet, so they should be written in debit side of trial balance.
Is Trial Balance a Conclusive Proof of the
Accuracy of Accounts?
After doing Journal entries ledger posting is Clone of those transactions in different accounts. A trial balance is prepared to check the numerical correctness of various balances of accounts prepared in this method. If the total of both the sides of trial balance is equal then it is considered that the posting in all the accounts is done properly, along with there is no numerical error in getting the balances of accounts. If the total of both the sides is not equal, then surely there is some mistake in posting of amounts in accounts or getting balance. So if the total is not matched there it is a mistake and to check the error is necessary. But if the total of trial balance is equal then also many types of incorrectness may be there which prove that trial balance is not conclusive proof of the accuracy of accounts. To prove these two things are necessary to know that what types incorrectness may be there in trial balance; and which typof errors may remain there in trial balance after matching means are still unrevealed.