1. Weygandt, Kieso, Kimmel, Trenholm, Kinnear Accounting Principles, Third Canadian Edition © 2009 John Wiley & Sons Canada, Ltd. Prepared by: Debbie Musil Kwantlen University College Chapter 2 The Recording Process

2. Weygandt, Kieso, Kimmel, Trenholm, Kinnear Accounting Principles, Third Canadian Edition © 2009 John Wiley & Sons Canada, Ltd. Assets, Liabilities & Owner’s Capital Liabilities Debit for decrease Credit for increase Normal balance Assets Debit for increase Credit for decrease Normal balance Owner’s Capital Debit for decrease Credit for increase Normal balance

3. Weygandt, Kieso, Kimmel, Trenholm, Kinnear Accounting Principles, Third Canadian Edition © 2009 John Wiley & Sons Canada, Ltd. Drawings, Revenues, Expenses Expenses Debit for increase Credit for decrease Normal balance Revenues Debit for decrease Credit for increase Normal balance Drawings Debit for increase Credit for decrease Normal balance

4. Weygandt, Kieso, Kimmel, Trenholm, Kinnear Accounting Principles, Third Canadian Edition © 2009 John Wiley & Sons Canada, Ltd. PIONEER ADVERTISING AGENCY Trial Balance October 31, 2008 DebitCredit Cash$ 15,200 Advertising supplies2,500 Prepaid insurance600 Office equipment5,000 Notes payable$ 5,000 Accounts payable2,500 Unearned revenue1,200 C. Byrd, capital10,000 C. Byrd, drawings500 Service revenue10,000 Salaries expense 900 $ 28,700 Rent expense 4,000 Example Trial Balance

5. Weygandt, Kieso, Kimmel, Trenholm, Kinnear Accounting Principles, Third Canadian Edition © 2009 John Wiley & Sons Canada, Ltd. Limitations of a Trial Balance Does not prove: Does not prove: That all transactions have been recorded, orThat all transactions have been recorded, or That the ledger is correctThat the ledger is correct Numerous errors may exist even though the trial balance columns agree Numerous errors may exist even though the trial balance columns agree Total debits and total credits may be equal, but may still be posted to the wrong account or in the wrong amountTotal debits and total credits may be equal, but may still be posted to the wrong account or in the wrong amount

6. Weygandt, Kieso, Kimmel, Trenholm, Kinnear Accounting Principles, Third Canadian Edition © 2009 John Wiley & Sons Canada, Ltd. Locating Errors If trial balance does not balance, then: If trial balance does not balance, then: Re-calculate account balancesRe-calculate account balances Scan trial balance for errors:Scan trial balance for errors: If divisible by two, look for entry in wrong columnIf divisible by two, look for entry in wrong column If divisible by nine, look for transposition errorsIf divisible by nine, look for transposition errors Otherwise, scan to see if an account balance has been omittedOtherwise, scan to see if an account balance has been omitted

7. Weygandt, Kieso, Kimmel, Trenholm, Kinnear Accounting Principles, Third Canadian Edition © 2009 John Wiley & Sons Canada, Ltd. COPYRIGHT Copyright © 2009 John Wiley & Sons Canada, Ltd. All rights reserved. Reproduction or translation of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein.