Trial Balance | Example | Format - AccountingTools

The trial balance is a report run at the end of an accounting period, listing the ending balance in each general ledger account. 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WhatisaTrialBalance?Thetrialbalanceisareportrunattheendofanaccountingperiod,listingtheendingbalanceineachgeneralledgeraccount.Thereportisprimarilyusedtoensurethatthetotalofalldebitsequalsthetotalofallcredits,whichmeansthattherearenounbalancedjournalentriesintheaccountingsystemthatwouldmakeitimpossibletogenerateaccuratefinancialstatements.Theyear-endtrialbalanceistypicallyaskedforbyauditorswhentheybeginanaudit,sothattheycantransfertheaccountbalancesonthereportintotheirauditingsoftware;theymayaskforanelectronicversion,whichtheycanmoreeasilycopyintotheirsoftware.Evenwhenthedebitandcredittotalsstatedonthetrialbalanceequaleachother,itdoesnotmeanthattherearenoerrorsintheaccountslistedinthetrialbalance.Forexample,adebitcouldhavebeenenteredinthewrongaccount,whichmeansthatthedebittotaliscorrect,thoughoneunderlyingaccountbalanceistoolowandanotherbalanceistoohigh.Forexample,anaccountspayableclerkrecordsa$100supplierinvoicewithadebittosuppliesexpenseanda$100credittotheaccountspayableliabilityaccount.Thedebitshouldhavebeentotheutilitiesexpenseaccount,butthetrialbalancewillstillshowthatthetotalamountofdebitsequalsthetotalnumberofcredits.Thetrialbalancecanalsobeusedtomanuallycompilefinancialstatements,thoughwiththepredominantuseofcomputerizedaccountingsystemsthatcreatethestatementsautomatically,thereportisrarelyusedforthispurpose.Ineffect,thereisnolongeraneedtousethetrialbalancereportinaccountingoperations.Thetrialbalanceisstrictlyareportthatiscompiledfromtheaccountingrecords.However,sinceadjustingentriesmaybemadeasaresultofreviewingthereport,itcouldbesaidthattrialbalanceaccountingencompassestheadjustmentprocessthatconvertsanunadjustedtrialbalanceintoanadjustedtrialbalance.TypesofTrialBalancesWhenthetrialbalanceisfirstprinted,itiscalledtheunadjustedtrialbalance.Then,whentheaccountingteamcorrectsanyerrorsfoundandmakesadjustmentstobringthefinancialstatementsintocompliancewithanaccountingframework(suchasGAAPorIFRS),thereportiscalledtheadjustedtrialbalance.Theadjustedtrialbalanceistypicallyprintedandstoredintheyear-endbook,whichisthenarchived.Finally,aftertheperiodhasbeenclosed,thereportiscalledthepost-closingtrialbalance.Thispost-closingtrialbalancecontainsthebeginningbalancesforthenextyear’saccountingactivities.HowtheTrialBalanceisUsedinaConsolidationIftherearesubsidiariesinanorganizationthatreporttheirresultstoaparentcompany,theparentmayrequestanendingtrialbalancefromeachsubsidiary,whichitusestoprepareconsolidatedresultsfortheentirecompany.Alternatively,theparentcompanymayrequireallofitssubsidiariestousethesameaccountingsystem,sothatallsubsidiaryresultscanbeautomaticallyrolledupintoconsolidatedfinancialstatements.TheDifferenceBetweenaTrialBalanceandaGeneralLedgerAtrialbalanceonlyshowstheendingbalanceineachaccount,whileageneralledgeralsoshowsthedetailedtransactionsthatcomprisetheendingbalance,oratleastpointstowardtherelevantsubledgerthatcontainsthisinformation.Thisadditionallevelofdetailrevealstheactivityinanaccountduringanaccountingperiod,whichmakesiteasiertoconductresearchandspotpossibleerrors.TrialBalanceFormatTheinitialtrialbalancereportcontainsthefollowingcolumns:AccountnumberAccountnameEndingdebitbalance(ifany)Endingcreditbalance(ifany)Eachlineitemonlycontainstheendingbalanceinanaccount.Allaccountshavinganendingbalancearelistedinthetrialbalance;usually,theaccountingsoftwareautomaticallyblocksallaccountshavingazerobalancefromappearinginthereport.Theadjustedversionofatrialbalancemaycombinethedebitandcreditcolumnsintoasinglecombinedcolumn,andaddcolumnstoshowadjustingentriesandarevisedendingbalance(asisthecaseinthefollowingexample).ExampleofaTrialBalanceThefollowingtrialbalanceexamplecombinesthedebitandcredittotalsintothesecondcolumn,sothatthesummarybalanceforthetotalis(andshouldbe)zero.Adjustingentriesareaddedinthenextcolumn,yieldinganadjustedtrialbalanceinthefarrightcolumn.ABCInternationalTrialBalanceAugust31,20XX   UnadjustedTrialBalance AdjustingEntries AdjustedTrialBalance Cash $60,000   $60,000 Accountsreceivable 180,000 50,000 230,000 Inventory 300,000   300,000 Fixedassets(net) 210,000   210,000 Accountspayable (90,000)   (90,000) Accruedliabilities (50,000) $(25,000) (75,000) Notespayable (420,000)   (420,000) Equity (350,000)   (350,000) Revenue (400,000) (50,000) (450,000) Costofgoodssold 290,000   290,000 Salaries 200,000 25,000 225,000 Payrolltaxes 20,000   20,000 Rent 35,000   35,000< Otherexpenses 15,000   15,000 Total $0 $0 $0 RelatedCoursesBookkeepingGuidebookClosingtheBooksTheYear-EndClose Performancereportdefinition Preferredcreditordefinition CPECourses/CPECoursesCPELogInHowtoTakeaCourseStateCPERequirements Books/CollegeTextbooksAccountingBooksFinanceBooksOperationsBooks Articles/ArticlesTopicsIndexSiteArchive Podcast/AccountingBestPracticesPodcastIndexPodcastSummary Dictionary/ FAQs/ About/AboutContactEnvironmentalCommitment Home/ AccountingTools 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