AccountsISC Class 11 · Trial Balance

Preparing a Trial Balance and Finding Capital: ISC Class 11 Accounts

Updated 17 October 2026 · Fact-checked

A trial balance is a statement of all ledger balances (debit and credit) on a date, prepared to check the arithmetical accuracy of the ledger. Under the balance method, assets, expenses, losses, drawings, opening stock and debtors go to the debit column; capital, liabilities, incomes and gains go to the credit column. If the totals agree, the ledger is arithmetically accurate, not necessarily free of errors.

Assets, expenses, drawings and opening stock go to debit; if capital is missing, it is the credit balancing figure, total debit minus total credit.

Illustration drawn for QuestionBuddy.

Understand Preparing a Trial Balance: Rules for Placing Balances and Finding Capital

Meaning and objectives. A trial balance lists the balances of all accounts at a date. Objectives: check arithmetical accuracy of posting, help prepare final accounts, give a summary of accounts, and help locate errors.

Methods. *Total method:* totals of debit and credit sides of each account. *Balance method:* only the balance of each account (the common method). *Total-cum-balance* method: both.

Which side?

*Debit column:* assets (cash, bank, debtors, stock-in-trade at opening, land, machinery, furniture), expenses and losses (purchases, wages, rent, salaries, discount allowed, bad debts), drawings, sales returns, carriage inwards.
*Credit column:* capital, liabilities (creditors, loan, bills payable, outstanding expenses), incomes and gains (sales, commission received, interest received, discount received), purchases returns, provisions and reserves.

Points. Opening stock appears in the trial balance; closing stock does not (it is given as an adjustment). Items given with the trial balance as adjustments are handled in the final accounts. If an item such as outstanding rent is given in the trial balance, it goes on the credit side.

Finding the capital. If capital is missing and all other balances are given, capital = total debit - total credit of the known balances: capital is the balancing figure (credit).

Agreement of the trial balance. Proves that every debit has a matching credit. It does not prove that all entries are correct: errors of omission, principle, compensation and wrong accounts can exist.

Advantages. Arithmetical check; summary of balances; aids final accounts. Limitations. Agreement is not proof of accuracy.

Preparing a Trial Balance: Rules for Placing Balances and Finding Capital: key facts

Trial balance rule: Total debit balances = Total credit balances | Assets, expenses, drawings on debit; capital, liabilities, incomes on credit; Balance method.
Capital as missing figure: Capital = Total of debit balances - Total of other credit balances | Credit column; When only capital is unknown.
Debit and credit items: Debit: assets, expenses, losses, drawings, returns inwards | Credit: capital, liabilities, incomes, returns outwards; Placement.

How to answer Preparing a Trial Balance: Rules for Placing Balances and Finding Capital questions

List each balance on its proper side and total.

1Identify the nature of each account.
2Put debit-nature balances on the left and credit-nature balances on the right.
3Total both columns.
4If one figure is missing, find it as the difference.

Preparing a Trial Balance: Rules for Placing Balances and Finding Capital in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Capital as a balancing figure

Suppose a shopkeeper lists the balances: cash 12,000, stock 40,000, furniture 30,000, creditors 22,000.

What is the owner's capital?

Try it first, then show the solutionSolution

Debit total = 12,000 + 40,000 + 30,000 = 82,000.
Capital = 82,000 - 22,000 = 60,000.

Answer: Rs 60,000

Memory hook: Capital is what is left after liabilities.

Tricks to remember Preparing a Trial Balance: Rules for Placing Balances and Finding Capital

Short memory aids. Say each one aloud once, then use it on a question the same day.

DEAD CLIC
Debit: Drawings, Expenses, Assets, Dr losses; Credit: Capital, Liabilities, Income, Credit gains.
Use it when: Placement.
Opening stock in, closing stock out
Only opening stock is in the trial balance.
Use it when: Stock.
Agree is not proof
Some errors do not disturb the totals.
Use it when: Limitations.

Preparing a Trial Balance: Rules for Placing Balances and Finding Capital: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Side of a balance · 1 mark · MCQBoard level

In a trial balance, "purchases returns" is shown in the:
(a) debit column (b) credit column (c) either (d) neither

Try it first, then show the solutionSolution

Purchases returns reduce purchases and carry a credit balance.

Answer: (b) credit column

Example 2: Objectives · 5 marks · Short answerBoard level

State three objectives and two limitations of a trial balance. (5 marks)

Try it first, then show the solutionSolution

Objectives: check arithmetical accuracy; basis for final accounts; summary of balances.
Limitations: does not detect errors of omission or principle; compensating errors are hidden.

Answer: Objectives: arithmetical check, aid to final accounts, summary. Limitations: agreement does not prove accuracy; some errors are not revealed.

Example 3: Prepare the trial balance · 7 marks · Long answerHarder board level

Prepare the trial balance as on 31 March from: capital 1,94,000; drawings 30,000; machinery 2,00,000; furniture 50,000; purchases 4,20,000; sales 6,80,000; sales returns 20,000; purchases returns 10,000; debtors 90,000; creditors 70,000; opening stock 60,000; wages 40,000; rent 24,000; commission received 16,000; cash 36,000; bank 1,00,000; bank loan 1,00,000. (7 marks)

Try it first, then show the solutionSolution

Debit: 30,000 + 2,00,000 + 50,000 + 4,20,000 + 20,000 + 90,000 + 60,000 + 40,000 + 24,000 + 36,000 + 1,00,000 = 10,70,000.
Credit: 1,94,000 + 6,80,000 + 10,000 + 70,000 + 16,000 + 1,00,000 = 10,70,000.
Both totals are Rs 10,70,000, so the trial balance agrees.

Answer:

Account	Dr (Rs)	Cr (Rs)
Capital		1,94,000
Drawings	30,000
Machinery	2,00,000
Furniture	50,000
Purchases	4,20,000
Sales		6,80,000
Sales returns	20,000
Purchases returns		10,000
Debtors	90,000
Creditors		70,000
Opening stock	60,000
Wages	40,000
Rent	24,000
Commission received		16,000
Cash	36,000
Bank	1,00,000
Bank loan		1,00,000
Total	10,70,000	10,70,000

Example 4: Find the capital · 6 marks · Long answerHarder board level

The following balances are on 31 March: cash 18,000; bank 62,000; debtors 1,10,000; stock 85,000; furniture 40,000; machinery 2,60,000; creditors 90,000; bills payable 30,000; outstanding wages 6,000; bank loan 1,50,000; purchases 5,40,000; sales 7,70,000; wages 60,000; rent 36,000; drawings 24,000; commission received 14,000. Capital is not given. Find it. (6 marks)

Try it first, then show the solutionSolution

Debit: 18,000 + 62,000 + 1,10,000 + 85,000 + 40,000 + 2,60,000 + 5,40,000 + 60,000 + 36,000 + 24,000 = 12,35,000.
Credit (known): 90,000 + 30,000 + 6,000 + 1,50,000 + 7,70,000 + 14,000 = 10,60,000.
Capital = 12,35,000 - 10,60,000 = Rs 1,75,000.

Answer: Capital Rs 1,75,000 (credit).

Example 5: Trial balance and errors · 4 marks · Short answerHOTS / competency

A trial balance agrees. The accountant concludes that the books are error-free. Evaluate, giving two types of errors that would not disturb the totals, with a numerical example for each. (4 marks)

Try it first, then show the solutionSolution

Complete omission of a transaction (a credit sale of Rs 5,000 not recorded) affects neither side.
Error of principle (machinery of Rs 20,000 debited to Purchases) keeps debit equal credit.

Answer: Agreement shows arithmetical accuracy only; omission and principle errors are examples that do not disturb the totals.

Where students lose marks in Preparing a Trial Balance: Rules for Placing Balances and Finding Capital

The slips examiners see most often, and what to write instead.

Mistake: Putting closing stock in the trial balance
Given elsewhere.
Wrong working
Closing stock on debit
Right working
Opening stock on debit; closing stock as an adjustment
Do this: Only opening stock.
Usually costs: 2 marks.
Mistake: Placing drawings on the credit side
Associated with capital.
Wrong working
Drawings Cr
Right working
Drawings Dr
Do this: Drawings reduce capital, so debit.
Usually costs: 1-2 marks.
Mistake: Placing returns inwards on credit
Sales are credit.
Wrong working
Sales returns Cr
Right working
Sales returns Dr
Do this: Returns inwards reduce sales: debit.
Usually costs: 1-2 marks.

Exam tips

Write the account type beside each balance when unsure.
Total both columns and show a check.
If capital is missing, mention it is the balancing figure.

Practice questions on Preparing a Trial Balance: Rules for Placing Balances and Finding Capital

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
Which of the following is shown on the credit side of the trial balance?
(a) drawings (b) outstanding wages (c) debtors (d) carriage inwards
Hint
A liability.
Answer
(b) outstanding wages
Q2 · 3 marks · Short answerBoard level
Explain the total method and the balance method of preparing a trial balance. (3 marks)
Hint
Totals versus balances.
Answer
In the total method, the total of each side of every account is shown; the balance method shows only the balance of each account on the side with the larger total. The balance method is more common.
Q3 · 6 marks · Long answerHarder board level
Prepare a trial balance and find the capital: cash 22,000; bank 48,000; stock 55,000; debtors 70,000; furniture 38,000; creditors 41,000; loan 60,000; purchases 2,10,000; sales 3,45,000; wages 25,000; rent 18,000; drawings 15,000; interest received 6,000. (6 marks)
Hint
Add the debit items first.
Answer
Debit: 22,000 + 48,000 + 55,000 + 70,000 + 38,000 + 2,10,000 + 25,000 + 18,000 + 15,000 = 5,01,000. Credit known: 41,000 + 60,000 + 3,45,000 + 6,000 = 4,52,000. Capital = 5,01,000 - 4,52,000 = Rs 49,000.
Q4 · 4 marks · Short answerHarder board level
Debit balances total Rs 8,45,000 including opening stock Rs 70,000. The credit balances are capital Rs 4,00,000, creditors Rs 1,20,000, sales Rs 3,10,000 and a missing figure for the bank overdraft. Find the bank overdraft. If the closing stock is Rs 90,000, state its place. (4 marks)
Hint
Credit must equal debit.
Answer
Known credits = 4,00,000 + 1,20,000 + 3,10,000 = 8,30,000. Overdraft = 8,45,000 - 8,30,000 = Rs 15,000. Closing stock is not in the trial balance; it is credited in the Trading Account and shown as a current asset.
Q5 · 3 marks · Short answerHOTS / competency
A trial balance agrees. It is later found that a delivery van bought for Rs 30,000 was debited to the Purchases account. Explain why the trial balance did not reveal the error and find its effect on gross profit and on the assets (ignore depreciation and closing stock changes). (3 marks)
Hint
Wrong account, correct side.
Answer
The debit was posted to the right side, so totals still agreed (an error of principle). Purchases were overstated by Rs 30,000, so gross profit was understated by Rs 30,000, and assets were understated by Rs 30,000 because the van was not recorded.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.Capital goes on which side?Show answer
Credit.
2.Drawings go on?Show answer
Debit.
3.Is closing stock in the trial balance?Show answer
No.
4.Agreement proves?Show answer
Arithmetical accuracy only.
5.Missing capital is?Show answer
The balancing figure.

Preparing a Trial Balance: Rules for Placing Balances and Finding Capital: frequently asked questions

Is a trial balance an account?

No, a statement.

Does the trial balance have a date?

Yes, as on a date.

Is bank overdraft debit?

No, credit.

Are provisions in trial balance?

Yes, if given, on credit.