The trial balance is a bookkeeping or accounting worksheet in which all ledger account are listed in debit and credit columns. This is the most important part of accounting so generally, it has a variety of advantages but there also some disadvantages of trial balance. The following are advantages and disadvantages of trial balance.
Advantages of trial balance
Trial balance has several advantages. Such of them are as follows:
- To check the debits equal the credits
- To find the uncover errors in journalizing
- To find the uncover errors in posting
- To locate the errors in ledger accounts
- To make financial statements
- To list the accounts at a single place
- To know the ending balance of each account at a glance
- To make the adjustments for unrecorded transactions
- To find the missing amount of an account in the special case
- To test the mathematical accuracy of the recording process
In short, the trial balance is an essential tool to verify the accuracy of the recording process.
Disadvantages of trial balance
A trial balance has some disadvantages. Such of them are as follows:
- It does not prove that all transactions have been recorded
- It does not prove that the ledger is correct
- Numerous errors may exist even though the trial balance columns agree
- It cannot find the missing entry from the journal
- It cannot find the missing entry from the ledger
- It cannot protect the repeated postings
- It cannot protect the offsetting errors
- It cannot protect the errors of principles
- It cannot protect the errors of commission
- It cannot protect the errors of omission
In short, a trial balance does not guarantee freedom from recording errors. This
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3 thoughts on “All Advantages and Disadvantages of Trial Balance”
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Simple and useful , Thank You !