Trial Balance

August 2nd, 2007 / No comments yet

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

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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