In Bookkeeping, explain what is a Trial Balance

August 2nd, 2007 Comments off
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Definition Or What is A Trial Balance
  • A list/statement/worksheet of all the account balances of the general ledger at a particular point in time from which the Income Statement and Balance Sheet of a business is drawn up.
  • It is prepared in each financial period as a summary of the closing of the previous ledger which proves the arithmetic accuracy of the ledger entry.
  • In bookkeeping, this is a useful tool for checking the accounting entries prior to doing the period-end processing.
  • Trial Balance reflects all the activity for an account or accounts within a selected date range. It shows the balance of the account at the beginning of the date range, the activity within the date range, and the balance at the end of the date range.
Illustration:
 Append below is the  following balances  extracted from the books of A Ltd on 31 December 2006 

  Credit   Debit
Bank overdraft 7,000 Fixtures 31,500
Capital (01/01/06) 90,000 Motor Vehicles 20,800
Creditors 15,200 Debtors 24,000
Profit for the year 58,800 Cash 500
Loan 35,000    
       

     The accumulated depreciation figures were:

     Motor vehicle   $ 6,100

     Fixtures          $12,200

 

     Question: 

 

     Complete the trial balance of A Ltdas at 31/12/2006.            

 

      Solution: 

      Trial Balance Of  A Ltd As At 31 December 2006

 

Debit

Credit
Premises

120,000

 
Creditors  

15,200

Fixtures

31,500

 
Overdraft  

7000

Motor Vehicles

20,800

 
Capital  

90,000

Motor Vehicles – depreciation  

6,100

Stock

2,700

 
Prepayments

750

 
Accruals  

250

Loan  

3,500

Fixtures-depreciation  

12,200

Profit & Loss Account  

58,800

Total ( DEBIT = CREDIT)

224,550

224,550

 

 

 
 

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Financial Accounting

 
 

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