What is the Trial Balance? Definition, Format, Example

Trial Balance Format ... We list all the accounts from the general ledger on the left-hand side. On the right-side of the report we show two columns, a column for ... HomeBookChapters:1)BasicConcepts2)BasicTransactions3)DoubleEntries4)AccountingCycle5)FinancialStatements6)InventoryOurBooksQuestionsBasicAccountingQuestionsFullQuestions&AnswersTeacherResourcesMoreStuff:StudentResourcesShopAccounting!TheBasicsBlogAbouttheAuthorContactMeWhatistheTrialBalance?Definition,Format,ExamplePreviouslesson: DebtorsandCreditorsControlAccounts Nextlesson: TheFourTypesofFinancialStatements: Definition,Examples,Objectives Whatisthetrialbalance?What'sitspurposeandformat?Inthislessonwe'llanswerallofthosequestionsandlearnhowtoputittogether.BesuretotestyourselfonhowtocompileatrialbalancebytryingtheTrialBalancePracticeExamplebelowaswellastheTrialBalanceMiniQuizattheendofthelesson.Andrightatthebottomofthepage,youcanfindmorequestionsonthetopicsubmittedbyfellowstudents.DefinitionofTrialBalance Thetrialbalanceisanaccountingreportorworksheet,mostlyforinternaluse,listingeachoftheaccountsfromthegeneralledgertogetherwiththeirclosingbalances(debitorcredit).Thetrialbalancesumsupallthedebitbalancesinonecolumnandallthecreditbalancesinanothercolumn.Thetotalsofeachcolumnshouldagreeinvalue.PurposeoftheTrialBalanceThe trialbalance isourpenultimatestepin theaccountingcycle (thefinalstepisthe financialstatements).The financialstatements arethemostimportantreportsofabusiness.Duetotheirimportance,wedoafinalcheckbeforepreparingthefinancialstatements.Thisfinalcheckisdonewiththe trialbalance.A trial isa test.Sothisstepisliterallya testofbalances.Butwhat balances arewetalkingabout?We’retalkingaboutthe closingbalances thatweworkedoutforeachoftheT-accounts: We’realsotalkingabout balancing theaccountingequation (i.e.theleftsidemustalwaysequaltherightside,asitisanequation):Thetrialbalanceisdrawnuptocheckforanymathematicalerrorsthatmayhaveoccurredduringtheearlierstagesoftheaccountingcycle-duringtherecordingofthejournalentriesandtheirpostingtothevariousaccounts.Thetrialbalanceisusuallypreparedonanannualbasis,inlinewith(andjustbefore)thefinancialstatements.However,itcanbepreparedonamorefrequentbasis,dependingontheneedsofthebusiness.TrialBalanceFormatThetrialbalancehasasimpleformat: Welistalltheaccountsfromthegeneralledgerontheleft-handside.Ontheright-sideofthereportweshowtwocolumns,acolumnfordebitsandacolumnforcredits.Atthebottomofeachofthedebitandcreditcolumnsarethetotals.Anadditionalcolumnshowingthefolioorcodeofeachgeneralledgeraccountcanalsobeincluded.TrialBalancePracticeExampleLet’sseehowthisworks.Hereisthegeneralledgerforthesamplebusinesswe'vebeenusingthroughoutourlessons, George’sCatering, showingeachoftheT-accountsinourrecords: Whendrawingupthetrialbalance,we'regoingtotakeeachoftheclosingbalancesoftheaccountsaboveandlistthemouttogetherwithacolumnfordebitsandacolumnforcredits.Beforegoinganyfurther,trytodrawupthetrialbalanceforGeorge'sCatering onyourownusingtheT-accountsshownabove.Whenyou'redone,checkyouransweragainstthesolutionjustbelow...Solution: Inthetrialbalanceexampleabove,thetotalofthe debits isequaltothetotalofthe credits. Thisishowitshouldbe.Anditmakessense,sincewe'vebeenrecordingonedebitandonecreditforeachandeverytransaction.TrialBalanceErrorsShouldthedebitandcredittotalsdifferinvalue,thenitiscertainthattheremusthavebeenoneormore accountingerrors.Thebookkeeperoraccountantwouldthenneedtofindandrectifytheerrorsbeforepreparingthefinancialstatements.Butactually,evenifthetotalofthedebitbalancesagreesinvaluewiththetotalofthecreditbalances,itstilldoesnotguaranteethattherearezeroerrorsintheaccountingrecords.Forexample,thebookkeepercouldhaveincorrectlydebitedthe$12,000todebtorsinsteadoftothebakingequipmentaccount.Inthissituationthetotalofthedebitbalanceswouldstillbe$31,500.Nonethelessthetrialbalanceisausefultoolforlocatinganderadicatingaccountingerrors.UnadjustedandAdjustedTrialBalancesTherearedifferenttermsusedtodescribethetrialbalanceatdifferentpointsintime.Thefirsttrialbalance(beforeanyend-of-yearcorrectionsandadjustmentsaremade)iscalledtheunadjustedtrialbalance.Thenextthingthathappensisthatanyerrorsidentifiedarecorrected,andotheradjustmentsaremadetoensuretherecord-keepingisinlinewithaccountingstandards.Atthispointthetrialbalanceisknownastheadjustedtrialbalanceandthefinancialstatementsareprepared.Aftertheclosingentriesaredoneandtheyearisover,wecallthetrialbalancethepost-closingtrialbalance.Notethatclosingentriesarenotcoveredonthissite,onlyinourofficialbooks: AccountingBasics:StudyGuideorCompleteGuide.TrialBalance-ManualvsComputerizedSystems Aspreviouslymentioned,errorsarefarlesslikelytooccurwithcomputerizedaccountingpackagesastheseautomaticallytakefiguresfromthe accountingjournals tothe ledger andrightthroughtothe financialstatements withcompleteaccuracy.Thusitcanbearguedthattrialbalancesaremorerelevantformanual(hand-drawn)accountingsystems,whereerrorscanbemadewhentransferringinformationthroughthevariousstepsoftheaccountingcycle.Thetrialbalanceislessimportantifyouuseanaccountingpackage.TestYourself!Beforeyoustart,Iwouldrecommendtotimeyourselftomakesurethatyounotonlygetthequestionsrightbutarecompletingthemattherightspeed.Difficultyrating:Beginner-->IntermediateQuizlength: 5questionsTimelimit:6minutesImportant: Thesolutionsheetonthefollowingpageonlyshowsthesolutionsandnotwhetheryougoteachofthequestionsrightorwrong.Sobeforeyoustart,getyourselfapieceofpaperandapentowritedownyouranswers.Onceyou'redonewiththequiz and writingdownyouranswers,clickthe CheckYourAnswers buttonatthebottomandyou'llbetakentoourpageofsolutions.Goodluck!ThisFormcannotbesubmitteduntilthemissingfields(labelledbelowinred)havebeenfilledinTrialBalanceMiniQuiz:Pleasenotethatallfieldsfollowedbyanasteriskmustbefilledin.1.Thetrialbalanceisatestof__________.*a)Sourcedocuments.b)Journalentries.c)Financialperformance.d)Balances.e)Noneoftheabove.2.Trueorfalse:Thetrialbalanceismostlyforexternalreporting.*a)Trueb)False3.Trueorfalse:Thetrialbalanceisafinalcheckbeforepreparingthefinancialstatements.*a)Trueb)False4.Trueorfalse:Thetrialbalancelistseachoftheaccountsfromthedebtorsledger,creditorsledgerandthegeneralledger.*a)Trueb)False5.Trueorfalse:Thetotalofthedebitsagreeinginvaluewiththetotalofthecreditsinatrialbalanceguaranteesthattherearezeroerrorsintheaccountingrecords.*a)Trueb)FalseFirstNameE-MailAddressCountryCountryUnitedStatesCanada----------------AfghanistanAlbaniaAlgeriaAmericanSamoaAndorraAngolaAnguillaAntarcticaAntiguaArgentinaArmeniaArubaAustraliaAustriaAzerbaijanBahamasBahrainBangladeshBarbadosBelarusBelgiumBelizeBeninBermudaBhutanBoliviaBosniaandHerzegovinaBotswanaBouvetIslandBrazilBritishIndianOceanTerritoryBritishVirginIslandsBruneiBulgariaBurkinaFasoBurundiCambodiaCameroonCapeVerdeCaymanIslandsCentralAfricanRepublicChadChileChinaChristmasIslandCocosIslandsColombiaComorosCongoCookIslandsCostaRicaCroatiaCubaCyprusCzechRepublicDenmarkDjiboutiDominicaDominicanRepublicEastTimorEcuadorEgyptElSalvadorEquatorialGuineaEritreaEstoniaEthiopiaFalklandIslandsFaroeIslandsFijiFinlandFranceFrenchGuianaFrenchPolynesiaFrenchSouthernTerritoriesGabonGambiaGeorgiaGermanyGhanaGibraltarGreeceGreenlandGrenadaGrenadaGuamGuatemalaGuineaGuinea-BissauGuyanaHaitiHeardandMcDonaldIslandsHondurasHongKongHungaryIcelandIndiaIndonesiaIranIraqIrelandIsraelItalyIvoryCoastJamaicaJapanJordanKazakhstanKenyaKiribadiNorthKoreaSouthKoreaKuwaitKyrgyzstanLaosLatviaLebanonLesothoLiberiaLibyaLiechtensteinLithuaniaLuxembourgMacaoMacedoniaMadagascarMalawiMalaysiaMaldivesMaliMaltaMarshallIslandsMartiniqueMauritaniaMauritiusMayotteMexicoFederatedStatesofMicronesiaMoldovaMonacoMongoliaMontserratMoroccoMontenegroMozambiqueMyanmarNamibiaNauruNepalNetherlandsNetherlandsAntillesNewCaledoniaNewZealandNicaraguaNigerNigeriaNiueNorfolkIslandNorthernMarianaIslandsNorwayOmanPakistanPalauPanamaPapuaNewGuineaParaguayPeruPhilippinesPitcairnIslandPolandPortugalPuertoRicoQatarReunionRomaniaRussiaRwandaS.GeorgiaandS.SandwichIsls.SaintKittsandNevisSaintLuciaSaintVincentandtheGrenadinesSamoaSanMarinoSaoTomeandPrincipeSaudiArabiaSenegalSerbiaSeychellesSierraLeoneSingaporeSlovakiaSloveniaSolomonIslandsSomaliaSouthAfricaSpainSriLankaSt.HelenaSt.PierreandMiquelonSudanSurinameSvalbardSwazilandSwedenSwitzerlandSyriaTaiwanTajikistanTanzaniaThailandTogoTokelauTongaTrinidadandTobagoTunisiaTurkeyTurkmenistanTurksandCaicosIslandsTuvaluU.S.MinorOutlyingIslandsUgandaUkraineUnitedArabEmiratesUnitedKingdomUruguayUzbekistanVanuatuVaticanCityVenezuelaVietnamUSVirginIslandsWallisandFutunaIslandsWesternSaharaYemenYugoslavia(former)ZaireZambiaZimbabwe SubscribetoNewsletterPleaseenterthewordthatyouseebelow.    That'sitforourlessonon WhatistheTrialBalance?Welldone!Youjustcompletedthelastofthelessonsinoursectiononthe accountingcycle.Ifyoufeelgoodatthispoint,moveontoournextsectiononthe fourtypesoffinancialstatements,thefinalstepoftheaccountingcycle.Orifyouwantmorepracticewiththetrialbalance,checkoutsomeadditionalquestionsfurtherbelow.Goodluck!ReturnfromWhatistheTrialBalance?to TheAccountingCycle ReturnfromWhatistheTrialBalance?tothe HomePage StayuptodatewithABfS!Followuson Facebook:FacebookTwitterPinterestTumblrRedditWhatsAppPreviouslesson: DebtorsandCreditorsControlAccounts Nextlesson: TheFourTypesofFinancialStatements:Definition,Examples,ObjectivesQuestionsRelatingtoThisLessonClickbelowtoseequestionsandexercisesonthissametopicfromothervisitorstothispage...(ifthereisnopublishedsolutiontothequestion/exercise,thentryandsolveityourself)TrialBalanceShouldAlwaysBalance? Q:Shouldthedebitandcredittotalsofatrialbalancealwaysagree? Ifso,why? ReturntothemaintutorialWhatistheTrialBalance?…ASimpleTrialBalanceExercise(WithFullSolution) Beforeyoubegin:It'simportantfortestingandexamstomakesureyounotonlyanswerquestionscorrectlybutalsocompletethemfastenough.Grab…JournalEntries,T-AccountsandTrialBalanceExercise YouarerequiredtoenterthefollowingtransactionsforMay19-5.Theaccountsarethentobebalancedoffandatrialbalanceextractedasat31May…BambaTrading(PrepareTrialBalance,IncomeStatement,BalanceSheetQuestion) Question1 1)ThefollowinglistofbalanceswasextractedfromBamba’sledgerat31March2011. BambaTrading: 1)Cashinhand2,100 …TrialBalanceMajorErrors Q:Whatarethemajorerrorslocatedbythetrialbalance?TrialBalanceErrors Q:Whataresomeerrorsnotaffectingthetrialbalance?CommentsHaveyoursayaboutwhatyoujustread!Leavemeacommentintheboxbelow.AdvertiseonAccounting-Basics-for-Students.com©Copyright2009-2021MichaelCelender.AllRightsReserved. ClickhereforPrivacyPolicy.reportthisadreportthisadSearchthisSite: Allthelessonsonthissiteandmuch,muchmore...AvailableNowOnPopularPagesHomeMoreInforeportthisadStayInTouchNavigationOurBooksTeacherResourcesTopMenuSearch©accounting-basics-for-students.com.Allrightsreserved.PrivacyPolicyx