Methods of preparing Trial balance
There are two common trial balance methods used for preparing trial balances: the Total Method and the Balance Method.
Total Method:
With the Total Method, the total of all debit balances and the total of all credit balances in each account can calculate separately. These totals then compare, and if they are equal, the trial balance balance. However, if there is a difference between the two totals, it indicates an error, and the difference enter as the balancing figure in the trial balance.
Balance Method:
The Balance Method involves calculating the balance of each account by subtracting the total of all credits from the total of all debits. The resulting balance then enter in the trial balance as either a debit or credit balance based on its nature (i.e., positive or negative balance).
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Both methods serve the purpose of preparing a trial balance to ensure the accuracy of accounting records. However, the Balance Method more commonly use in practice due to its simplicity and efficiency. As it requires fewer calculations and less time.
Ultimately, The choice between the Total Method and the Balance Method depends on the preference and requirements of the accountant or the organization.
