Accountancy · Ch 7 — Trial Balance and Rectification of Errors
Totals-cum-balances Method
Totals-cum-balances Method
The Totals-cum-Balances Method
This method is exactly what its name suggests — a combination of the totals method and the balances method. Instead of preparing two separate trial balances (one showing totals and another showing balances), you prepare a single trial balance that shows both.
The trial balance under this method has four amount columns: two for the debit and credit totals of each account, and two for the debit and credit balances of those accounts. Each account appears only once in the list, but you fill in its total debits, total credits, debit balance, and credit balance in the appropriate columns.
Why is it not used in practice?
The textbook is clear: this method is time-consuming and hardly serves any additional or special purpose. Since you already have the totals and balances available from the ledger, combining them into one statement adds extra work without giving any new insight. For this reason, it is rarely, if ever, used in real accounting.
Illustration from the textbook
The textbook works through the same set of ledger accounts (Rawat's Capital, Rohan, Machinery, Rahul, Sales, Cash, Wages, Depreciation, Purchases) and shows the trial balance under all three methods. For the totals-cum-balances method, the trial balance appears as follows:
Trial Balance as at March 31, 2014 (Using Totals-cum-Balances Method)
| Account Title | L.F. | Debit Total (₹) | Credit Total (₹) | Debit Balance (₹) | Credit Balance (₹) |
|---|---|---|---|---|---|
| Rawat's Capital | 60,000 | 60,000 | |||
| Rohan | 40,000 | 60,000 | 20,000 | ||
| Machinery | 20,000 | 3,000 | 17,000 | ||
| Rahul | 75,000 | 55,000 | 20,000 | ||
| Sales | 70,000 | 70,000 | |||
| Cash | 1,00,000 | 57,000 | 43,000 | ||
| Wages | 5,000 | 5,000 | |||
| Depreciation | 3,000 | 3,000 | |||
| Purchases | 62,000 | 62,000 | |||
| Total | 3,05,000 | 3,05,000 | 1,50,000 | 1,50,000 |
Notice how the totals columns balance (₹3,05,000 on each side) and the balances columns also balance (₹1,50,000 on each side). This is the key check: both pairs of columns must agree.
How to read the table
Take the account Rohan as an example. The ledger shows:
- Total debits to Rohan's account: ₹40,000
- Total credits to Rohan's account: ₹60,000
- Since credits exceed debits, Rohan has a credit balance of ₹20,000
So in the trial balance, Rohan appears with a debit total of ₹40,000, a credit total of ₹60,000, and a credit balance of ₹20,000. The debit balance column is left blank for this account.
For Machinery, the ledger shows:
- Total debits: ₹20,000
- Total credits: ₹3,000 (depreciation)
- Debit balance: ₹17,000
Here, the debit total is ₹20,000, the credit total is ₹3,000, and the debit balance is ₹17,000. The credit balance column is blank.
The logic behind the four columns
The totals columns capture the gross activity in each account — all the debits and all the credits posted during the period. The balances columns capture the net result — what remains after offsetting debits against credits.
For accounts that have only one side of entries (like Wages, which has only debits), the debit total equals the debit balance, and the credit total and credit balance are zero. For accounts like Rawat's Capital, which has only credits, the credit total equals the credit balance.
A practical tip for preparation
If you ever need to prepare a trial balance using this method, follow these steps:
- List all ledger accounts.
- For each account, find the total of all debit entries and the total of all credit entries from the ledger.
- Compute the balance (debit if total debits > total credits, credit if total credits > total debits).
- Enter all four figures in the appropriate columns.
- Total all four columns. The debit total column must equal the credit total column, and the debit balance column must equal the credit balance column. …