how a trail balance is extracted from the nominal ledger, and the importance of a trail balance?

Answer 1

hi the above is correct except a trial balance can be pulled up at any time if using a computerised system eg sage. and may be more of a task if accounts is done manually dpending on the size of the business. it is gennerally reserved for the end of the financial year to highlight possible errors and like like the person above said it doesnt always highlight an error. the balances from only the nominal ledger and not the subsidiary ledgers are used. to highlight errors in the other two ledgers reconciliation statements between the nominal ledger account (eg sales, purchases returns) and the corresponding subsidiary ledger are drawn up.

if a balance b/d is on the debit side you enter it on the debit side of the trial balance and if on the credit side you enter on the credit side of the trial balance. this is the balance that will be used at the beginning of the next financial period for assets and liabilities as expenses and revenues are period costs and are not brought forward to the next financial year. (they are written off profit or added to loss in the profit and loss statement)

the trial balance should always balance if it doesnt balance a suspence account is opned. this a temporary account until the error has been found. the difference between the two sides should be entered into the suspence account on the appropriate side in order to make the trial balance balance.
the suspence acount goes no further than the trial balance (is not put in the balance sheet or P&L account.) as the errors are found the balance/amount in the suspence account should reduce till it gets to zero and then balances can be transfered to the financial statements.

if you need more help email or post a question, i'll happily help seeing a cant yet get a job

hope this helps

Answer 2

Its a Trial Balance not trail.

The trial balance is a worksheet where all the balances of each ledger are entered in two columns, namely debit and credit. Trial balance is prepared in each financial period as a summary of the closing of the previous ledger. The total of the debit side should always be equal to the total of the credit side which proves the accuracy of the ledger entry. The trial balance is also a tool to detect any errors which may have occurred during the double-entry system of the ledger. However, a balanced trial balance does not necessarily guarantee that there is no error. For example, a transaction could have been removed from the ledger account, a journal entry might have been posted in the wrong ledger, or debit and credit entries could have been transposed: One feature of the double entry system that often confuses users, is that the terms 'credit' and 'debit' are used in the opposite way to the perspective taken, e.g., in typical bank account statements. Credit is take out and debit is to put in.