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Lecture 8

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15 views

Lecture 8

Uploaded by

tenir46570
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Trial Balance

Definition: The summary of closing balances of ledger accounts is called trial balance.
 First of all we write the name of the person whose accounts are these.
o Then we write “Trial Balance”
 It can be for year or month and we have to write it on top “for the month ended 31 July 2017.”
 In this we make summary of closing balances (balancing figures) we found in ledger.
o If we have debit balance we have to write it on debit side (as it is written on credit side
in ledger).
 If balance is zero we do not write it in trial balance.
 In trial balance the debit and credit side should be equal.
o If they are not it means there is a mistake in the question.
o If both sides become equal we say “Trial balance is in”
 If it is not we say “trial balance is out.”

Carriage in is an expanse. It is the cost of bringing goods to your place at your own cost.

If the requirement of question is to prepare ledger account. Then we have to make complete format of
ledger account.

But if the requirement of question is to make trial balance and we have to do working (make ledger) to
make trial balance. Then we can omit dates and/or other things. It will be acceptable.
 The word “due” serves two purposes in transactions
o If it is with income, it shows receivable. E.g. Services are given and amount is due means
amount is yet to be received.
o If it is with expense, it shows payable. E.g. Electricity bill due means expense have not
been payed yet.
 Sentence “Off the receivable” means from receivable. ( ‫میں سے‬Receivable).
 Miscellaneous expenses means small expense which are all displayed in one head instead of
making another head for each.

Financial accounting is done on monitory basis. We cannot pass entry


on the basis of a contract.
 E.g. we hire an accountant and made a contract with him on 1st Jan to give him 10lakh
rupees but we cannot pass entry on 1st as we have not payed yet.
 But after one month when he will have delivered services and then we are liable to pay
him.
o Now we can either pay him and record expense or record payable.

Transaction: An order was placed for equipment costing 10,000.


Note: We have to write a note “I have ignored this” OR “there is no financial
transaction.” If we did not write this will be considered as a mistake and marks will be
deducted.

MCQs

1. Cash Owing to Ali means we have to give cash to Ali


 Cash Owing from Ali means we have to take cash from Ali.
2. Unsold goods at the end of the year are called stock.

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