Question:
State the limitations of trial balance?

Answer:

A trial balance has some limitations :

1) It does not prove that all transactions have been recorded
2) It does not prove that the ledger is correct
3) Numerous errors may exist even though the trial balance columns agree
4) It cannot find the missing entry from the journal
5) It cannot find the missing entry from the ledger
6) It cannot protect the repeated postings
7) It cannot protect the offsetting errors
8) It cannot protect the errors of principles
9) It cannot protect the errors of commission
10) It cannot protect the errors of omission

In short, a trial balance does not guarantee freedom from recording errors.

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Mr. Sunrise started a business for buying and selling of stationery with ₹ 5,00,000 as an initial investment. Of which he paid ₹ 1,00,000 for furniture, ₹ 2,00,000 for buying stationery items. He employed a sales person and clerk. At the end of the month he paid ₹ 5,000 as their salaries. Out of the stationery bought he sold some stationery for ₹ 1,50,000 for cash and some other stationery for ₹ 1,00,000 on credit basis to Mr. Ravi. Subsequently, he bought stationery items of ₹ 1,50,000 from Mr. Peace. In the first week of next month there was a fire accident and he lost ₹ 30,000 worth of stationery. A part of the machinery, which cost ₹ 40,000, was sold for ₹ 45,000.

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Question:
State the limitations of trial balance?

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Question:
State the limitations of trial balance?