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Trial Balance. Accounting Cycle: 1. Transaction Occurs 2. Journal entry 3. General Ledger (t-accounts) 4. Trial Balance.

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Presentation on theme: "Trial Balance. Accounting Cycle: 1. Transaction Occurs 2. Journal entry 3. General Ledger (t-accounts) 4. Trial Balance."— Presentation transcript:

1 Trial Balance

2 Accounting Cycle: 1. Transaction Occurs 2. Journal entry 3. General Ledger (t-accounts) 4. Trial Balance

3 The Rule of debiting and crediting accounts: Assets Owner’s Equity Liabilities = +

4 After each entry, the Ledger should be in BALANCE! (A = L + OE) Therefore, to check the accuracy of the Ledger, we prepare a TRIAL BALANCE

5 A TRIAL BALANCE is a simple procedure used to find out if the ledger is in balance (A = L + OE) The debit entries must equal the debit entries, if not, the ledger is “out of balance”

6 For a TRIAL BALANCE, we prepare a heading  Who?  What?  When? Accounts are listed in order of A, L, OE Account balances are listed in the correct columns, and the column totals should AGREE!!!!

7 If “OUT OF BALANCE” 1. Re-add the trial balance 2. Check the figures from the ledger to the trial balance 3. Recalculate the account balances 4. Check that the transactions have equal debits and credits

8 Additional ‘Out of balance’ 5. If difference is divisible by 9; transposition error example: 123  If difference is a multiple of 10; addition error

9

10 Step 5 of the Accounting Cycle BALANCE SHEET

11 Homework: Ex. #3 & 5 p (t), p.84 (w) Ex. #2 & 3 p. 83 (t), p. 34 (w) Ex. #3 p. 97 (t), p. 38 (w) Trial Balance: Ex. #1,2,3 p (t), p (w)


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