Trial Balance

A trial balance is a listing of the account balances in a ledger A trial balance is a listing of the account balances in a ledger A trial balance is normally performed once a month at the end of the month A trial balance is normally performed once a month at the end of the month A trial balance is used to ensure that the ledger is always in balance, just as a balance sheet should be balanced so should a ledger A trial balance is used to ensure that the ledger is always in balance, just as a balance sheet should be balanced so should a ledger

For a trial balance the accounts of a ledger are listed in a column. For a trial balance the accounts of a ledger are listed in a column. The accounts with debit balances (assets) are totalled and compared to the total of the accounts with credit balances (liabilities and OE) The accounts with debit balances (assets) are totalled and compared to the total of the accounts with credit balances (liabilities and OE) If the two sums are the same then the ledger is in balance, if they do not agree then the ledger must be out of balance If the two sums are the same then the ledger is in balance, if they do not agree then the ledger must be out of balance

How to take off a trial balance How to take off a trial balance 1) title; who, what, when 1) title; who, what, when –Company name, trial balance, date List the asset accounts (debit balances), then list liabilities and owners equity (credit balances) List the asset accounts (debit balances), then list liabilities and owners equity (credit balances) Total the debit (left column) and credit (right column) at the bottom there should be a single line above the total and a double underline Total the debit (left column) and credit (right column) at the bottom there should be a single line above the total and a double underline Column totals must agree Column totals must agree

Correcting an incorrect trial balance 1) Re-add the trial balance columns 1) Re-add the trial balance columns 2) Check the numbers in the trial balance to the totals in the ledger 2) Check the numbers in the trial balance to the totals in the ledger 3) Recalculate the account balances in the Ledger 3) Recalculate the account balances in the Ledger 4) check that the accounting entries in the ledger are balanced transactions 4) check that the accounting entries in the ledger are balanced transactions

Review questions pg 104 Review questions pg 104 Complete chapter 4.4 review Questions and section exercises Once you have your quiz back check your answers to the answers provided in First Class Start on Chapter 4.5 Section Exercises pg 107, 1-3

Section Review Questions 1. Because A=L+OE and all Assets have debit balances and Liabilities and Owners Equity have Credit balances the totals will be equal 2. List all accounts from the ledger on the trial balance sheet, total the debits and credits, compare the totals 3. (this will not be on any test) 4. It is important to balance the ledger to insure that all work is accurate in accounting 5. Once a month

6) It is kept on file 6) It is kept on file 7) A trial balance should be kept on hand until an audit is preformed or for one year 7) A trial balance should be kept on hand until an audit is preformed or for one year 8) If the ledger is not balanced after completing all correction steps then you have made an error in correcting 8) If the ledger is not balanced after completing all correction steps then you have made an error in correcting 9) Re-add, check the ledger figures, recalculate ledger totals, check transaction balances 9) Re-add, check the ledger figures, recalculate ledger totals, check transaction balances