Revision Note On Trial Balance

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In bookkeeping and accounting, a trial balance is a must. Below are some guidelines and simple snapshots for students to take note of Trial Balance.

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Remember the following salient points on Trial Balance:-

What is a Trial Balance which is:

  • a list of debit and credit balances extracted from the accounts in the ledger at a particular date

Understand the Purpose of a Trial Balance which is:

  • The Trial Balance is prepared for the purpose of checking the arithmetical accuracy of the entries made in the ledger.
  • The Trial Balance enable the counter check of the equality of debits and credits after posting ie.

Sum of debits account balance = Sum of the credit accounts balance in the Trial Balance and if not equal, errors in journalizing and posting.

Steps involve:

  • List the account titles and their balances
  • Total the debit and credit columns
  • Prove the equality of the two columns

Note that a Trial Balance follows the Double Entry or Dual Aspect Concept:

  • The total debit balances will be equal to the total credit balances in the Trial Balance if the double-entry principles of recording have been strictly adhered to.

Other salient points:

  • An account has a debit balance when its debit total exceeds its credit total
  • An account has a credit balance when its credit total exceeds its debit total
  • Assets, expenses and drawings accounts have debit balances
  • Liability, capital and revenue accounts have credit balances.
  • Purchases, Sales Returns have debit balances
  • Sales, Purchases Returns have credit balances
  • Personal accounts record transactions with persons who have dealng with the business for example debtors and creditors accounts
  • Errors that affect the agreement of the trial balance totals are wrong calculation of balances, omission of either a debit or credit entry of a transaction, entry on the wrong side of an account and errors in amount.
  • Errors that do not affect the agreement of the trial balance totals are complete omission of entries of a transaction errors of commission, errors in principle, compensating errors, complete reversal of entries and errors in original entry.

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