Chapter 4.4: Trial Balance

Ledger A “book” storing all accounts Total of all debit balance accounts equal total of all credit balance accounts Supplies A/R Cash Bank Loan A/P J. Yogi, Capital 900

Methods of Taking Off a Trial Balance Step 1: List all the accounts and their balances. Leave room for a 3-line heading Step 2: Place the debit balances in a debit balances in a debit column and credit balances in a credit column. Step 3: Add up the two columns. Step 4: See if the two columns are the same (balances). Step 5: Write a heading on the top (Who, What, When)

Trial Balance Checks accuracy of the ledger Account balances may still be incorrect

Trial Balance Errors If a ledger does not balance, follow these four steps: 1. Re-add the trial balance accounts 2.Check the figures from the ledger against those of the trial balance. Make sure none are missing or on the wrong side or for the wrong account. 3.Recalculate the account balances. 4.Check that there is a balanced accounting entry in the accounts for each transaction.

Find the difference between debits and credit totals If 1, 10, 100, etc. may be adding error on trial balance or accounts Check for difference in an account balance Divide difference by 2, meaning an account balance on wrong side on trial balance If difference is divisible by 9 with no remainder, transposition error made, e.g. 72 not 27 Missing entry from journal to ledger Re-check! Trial Balance Errors