What is Trial Balance and Objectives in Accounting

 A trial balance forms a connecting link between the ledger accounts and final accounts Trial Balance is prepared to check the arithmetic accuracy of the books of accounts The fundamental principle of the Double Entry System of Accounting is that for every debit, there must be a corresponding credit. Thus for every debit or a series of debits given to one or several accounts, there is a corresponding credit or a series of credits of an equal amount given to some other account or accounts and vice-versa. It follows, therefore, that the sum total of debit amounts should equal the credit amounts of the ledger at any date. But if the various accounts in the ledger are balanced, then the total of all debit balances must be equal to the total of all credit balances if the books of accounts are arithmetically accurate.

Thus at the end of the financial year or at any other time, the balances of all the ledger accounts are extracted and written up in a statement known as trial balance and finally totaled up to see if the total of debit balances is equal to the total of credit balances. A trial balance may thus be defined as a statement of debit and credit totals or balances extracted from the various accounts in the ledger with a view to test the arithmetical accuracy of the books.

The agreement of trial balance reveals that both the aspects of each transaction have been recorded and that the books are arithmetically accurate. If trail balance does not agree it shows that there are some errors that must be detected and rectified if the correct final accounts are to be prepared. Thus, the trial balance forms a connecting link between the ledger accounts and final accounts. 

Objectives of the Trial Balance

• To have balances of all the accounts of the ledger in order to avoid the necessity of going through the pages of the ledger to find it out 
• To have a proof that the double-entry transaction has been recorded because of its agreement
• To have material for preparing the profit and loss account and balance sheet of the business
• To have arithmetic accuracy of the books of accounts because of the agreement of the trial balance

Final Accounts Prepared to Achieve Goals of Accounting

Why we prepare final accounts. Final accounts are prepared to achieve the goals of accounting. So as to know the profit and loss earned by a firm, Income proclamation or Trading and profit and loss account are readied. Accounting report or position proclamation will depict the monetary state of the firm on a specific date. These two proclamations, for example, Trading and Profit and Loss Account and Balance Sheet are set up to give the last after-effects of the business that is the reason both these are all in all called as final accounts. Along these lines, last records incorporate the arrangement of:

•           Trading and Profit and Loss Account

•           Balance Sheet

Final accounts are the methods for passing on to the executives, proprietors and intrigued untouchables a succinct picture of productivity and monetary position of the business. The arrangement of the last records isn't the initial phase in the bookkeeping procedure yet they are the finished results of the bookkeeping procedure which give brief bookkeeping data of the bookkeeping time frame after the bookkeeping time frame is finished. These records rundowns all the bookkeeping data recorded in the auxiliary books and the record running into hundreds or thousands of pages

Trading and Profit and Loss Accounts:

This record is comprised of two records for example trading and Profit and Loss account. Trading concerns i.e. those concerns which buy products from one market and move these in another market at a Profit, set up this records This record is the plan to realize the Trading results or gross profit on Trading, i.e how much gross profit of the business has earned from purchasing and moving amid a specific period. The distinction between the deals and cost of merchandise sold is gross profit. To calculate the cost of merchandise sold, we think about opening stock, buys, direct costs on buying or assembling the products and shutting stock. The equalization of this record speaks to net benefit or gross shortfall and is exchanged to the benefit and deficit account. Then again Profit and Loss account is set up to figure the net profit of the business. There are sure things about salaries and costs of the business which must be contemplated for ascertaining the net profit of the business. These are circuitous nature, for example concerning the entire business and identifying with different exercises which are finished by the business to make the merchandise accessible to the customers. Backhanded costs might move and conveyance costs, the board costs, money related costs and so on. The idea of this record is ostensible record and equalization of this record is exchanged to the Balance sheet's Capital Account as the entire profit or loss will be that of the proprietor and it will increment or lessening his capital.