Personal accounts and trial balance


    As the title of the subject implies, accounting is all about counting. We use different financial statements and methods to count or record data. Like wise, the information we recorded in the daily journal (previous lecture), we now need to make individual personal accounts for all the parties involved in that journal and balance off their accounts to see which account has credit balance and which as debit balance.

    The format of a personal account is as follows

    Date Detials Amount (Dr) Date Details Amount (Cr)


    For instance just consider the example of the following journal and just 3 of its many personal accounts:

    Date Particular L/F Debit(Dr) Credit(Cr)
    01.11.2011 Cash account   $1,000  
              Mr.asif’s account     $1,000
      Cash account   $51000  
             Capital account     $51000
      Started business      
    11.11.2011 Toyota Motors   $5600  
              Bank account     $5600
      Bought van from Toyota motors      
    16.11.2011 Purchase account   $2000  
              Cash account     $2000
      Purchased from admiral traders      
    17.11.2011 Purchase account   $400  
             F.K traders     $400
      Bought goods from FK traders on credit      
    17.11.2011 Cash account   Rs.550  
          Sales account     Rs.550
      Sold goods on cash      
    18.11.2011 Mr.aun’s account   $600  
               Sales account     $600
      Sold goods to MrAun on credit      
    19.11.2011 Sales return account   $500  
             Mr.Aun’s account     $500
      Mr. Aun returned goods due to a fault      
    20.11.2011 Bank account   $550  
           Cash account     $550
      Deposited into the bank      


    Date Details Amount (Dr) Date Details Amount (Cr)
    11.11.11 Toyota motors $5600   Blance c/d (carried down) $5600
        TOTAL     TOTAL
        $5600     $5600



    Date Details Amount (Dr) Date Details Amount (Cr)
    16.11.11 Purchased goods on cash $2000      
    17.11.11 Purchased from FK trader $400   Balance c/d $2400
        TOTAL     TOTAL
        $2400     $2400


    Mr.Aun’s Account

    Date Details Amount (Dr) Date Details Amount (Cr)
    20.11.11 Bought goods $600 17.11.11 Returned goods $500
            Balance b/c $100
        TOTAL     TOTAL
        $600     $600


    *B/b or balance brought down is the money carried forward in hte same account from the previous month to the present month’s account record.

    *b/c or balance carried down is the money or balance which has to be carried down into the account records of the same account for the next month.

    If b/c is Cr then b/d of the next month would be Dr.

    Now that you know how to make personal accounts, lets move a step forward.

    Lets talk about Trial Balance.

    Trial balance is a financial statement showing the totals of all the accounts in a journal. As the name suggests, its basic aim is to check and ascertain that all the entries are correctly made into all the accounts.  Another variation of the accounting equation is TOTAL DEBIT = TOTAL CREDIT. Trial balance is based on this equation. If all the entries are correctly made, the debit side’s total would be equal to credit side’s total.

    Format of the trial balance is as follows



    Trial balance of the above mentioned example would be something like this… (just mentioning the3 accounts made)

    1 Purchase   $2400  
    2 Motor vehicle   $5600  
    3 Mr.Aun’s account   $100  






    The trial balance would go on till all the entries have been made and till both the totals are equal.

    NOTE : Trial balance only shows the errors that upset the total. For example if you have completely omitted a transaction, the trial balance would still balance and the error would not be highlighted.