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The next step after preparation of Ledger is the preparation of ________:
- a)Trial balance
- b)Final Accounts
- c)Cash Flow statement
- d)Balance sheet
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
The next step after preparation of Ledger is the preparation of ______...
Following Steps are involved in the preparation of a Trial Balance:
- All Ledger Accounts are closed at the end of an accounting period.
- Ledger balances are posted into the trial balance.
- Trial Balance is cast and errors are identified.
- Suspense account is created to agree the trial balance totals temporarily until corrections are accounted for.
- Errors identified earlier are rectified by posting corrective entries.
- Any adjustments required at the period end not previously accounted for are incorporated into the trial balance.
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The next step after preparation of Ledger is the preparation of ______...
Preparation of Trial Balance:
Trial balance is the next step after the preparation of Ledger in the accounting process. It is a statement that lists all the general ledger accounts and their balances (debit or credit) to ensure that the total debits equal the total credits.
Importance of Trial Balance:
1. Accuracy Check: It helps in detecting errors in the ledger accounts by verifying that the total debits equal the total credits.
2. Preparation of Financial Statements: Trial balance serves as the basis for preparing financial statements like the income statement and balance sheet.
3. Assists in Adjusting Entries: It helps in identifying any adjusting entries that need to be made before the financial statements are prepared.
Steps to Prepare Trial Balance:
1. List all Accounts: List all the accounts from the ledger with their respective balances.
2. Separate Debits and Credits: Differentiate between debit and credit balances.
3. Calculate Total Debits and Credits: Calculate the total of debit balances and credit balances separately.
4. Verify Equality: Verify that the total debits equal the total credits. If they do not match, then there might be errors in the ledger accounts.
5. Make Adjustments: Make any necessary adjustments to rectify errors or discrepancies.
Once the trial balance is prepared and the total debits equal the total credits, it can be used to create financial statements like the income statement and balance sheet.
Trial balance is the next step after the preparation of Ledger in the accounting process. It is a statement that lists all the general ledger accounts and their balances (debit or credit) to ensure that the total debits equal the total credits.
Importance of Trial Balance:
1. Accuracy Check: It helps in detecting errors in the ledger accounts by verifying that the total debits equal the total credits.
2. Preparation of Financial Statements: Trial balance serves as the basis for preparing financial statements like the income statement and balance sheet.
3. Assists in Adjusting Entries: It helps in identifying any adjusting entries that need to be made before the financial statements are prepared.
Steps to Prepare Trial Balance:
1. List all Accounts: List all the accounts from the ledger with their respective balances.
2. Separate Debits and Credits: Differentiate between debit and credit balances.
3. Calculate Total Debits and Credits: Calculate the total of debit balances and credit balances separately.
4. Verify Equality: Verify that the total debits equal the total credits. If they do not match, then there might be errors in the ledger accounts.
5. Make Adjustments: Make any necessary adjustments to rectify errors or discrepancies.
Once the trial balance is prepared and the total debits equal the total credits, it can be used to create financial statements like the income statement and balance sheet.
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The next step after preparation of Ledger is the preparation of ________:a)Trial balanceb)Final Accountsc)Cash Flow statementd)Balance sheetCorrect answer is option 'A'. Can you explain this answer?
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