Consolidation of Accounts – Trial Balance

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1. What is the meaning of Consolidation of Trail Balance?

Companies use Trial Balance as a means to understand the Financial Position of the Company as compared to the Previous Financial Year. The transactions of any financial year across all ledger codes will be available in the Trial Balance. Any company will be able to mitigate the problems by finding out various transactions & correct them to present a correct & accurate Accounting Data for any Company

For ex: the below Organisational Chart presents as to how Trial Balances should get their accounts consolidated

Company – ABC Holding Company
Company – EFG Group Company
Company – DEF Group Company – Transactions to be posted (Subsidiary)
Company – POI Group Company – Transactions to be posted (Subsidiary)
Company – QWE Group Company
Company – XYZ Group Company – Transactions to be posted (Subsidiary)
Company – LKG Group Company – Transactions to be posted (Subsidiary)

 

** Transactions will be posted in Subsidiaries Companies

** Consolidation Report: If we run a Trial Balance for “Company – EFG Group Company”, then the total of

a. Company – DEF Group Company – Transactions to be posted (Subsidiary)

b. Company – POI Group Company – Transactions to be posted (Subsidiary)

Will need to be consolidated & shown in Trial Balance

Company – DEF Group Company

Account Code Particular Debit Credit
30001 Sundry Debtors 10000
40001 Revenue 10000
50001 Purchase 2500
20001 Sundry Creditors 2500
Total 12500 12500

 

Company – POI Group Company

Account Code Particular Debit Credit
30001 Sundry Debtors 15000
40001 Revenue 15000
50001 Purchase 5000
20001 Sundry Creditors 5000
Total 20000 20000

 

Trial Balance of “Company – EFG Group Company” will appear as follows

Account Code Particular Debit Credit
30001 Sundry Debtors 25000
40001 Revenue 25000
50001 Purchase 7500
20001 Sundry Creditors 7500
Total 32500 32500