Trial Balance
This lesson teaches the format of a trial balance and the steps to prepare one using a list of account balances at the end of an accounting period.
Related Lessons:
Format Of Trial Balance
The trial balance is a statement that lists the closing balances of all the ledger accounts on a given date. This helps to check the arithmetical accuracy of the accounts and in preparing the financial statements.
The trial balance comprises of the following information:
Header
The header shows that the statement is a Trial Balance and states the date on which the balances of the accounts are extracted. This date indicates the day, month, and year of the statement.
1st column – Particulars
Records the name of the accounts of the business.
2nd column – Debit
Records the amount of an account with a debit balance.
3rd column – Credit
Records the amount of an account with a credit balance.
Total Balance
After listing all the accounts in the trial balance, the amounts in the debit and credit columns are totaled. The total debit must equal the total credit. If they do not balance, it indicates that errors have occurred in the recording process.
Preparing A Trial Balance
To prepare a trial balance, we start by stating the date that this trial balance represents in the header.
Under the Particular column, we list down the accounts, one per row, that the business has.
In the Debit column, we record the amount of the account with a debit balance.
In the Credit column, we record the amount of the account with a credit balance.
Finally, we totaled the amounts in the debit and credit columns.
Recap:
Debit balances account: Assets, Expense, Drawings.
Credit balances account: Liability, Income, Capital.