May 28, 2022

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Accounting + Finance Blog

TRIAL BALANCE

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TRIAL BALANCE

A trial balance is a list of account balances from the ledger showing the arithmetic accuracy of the ledger accounts. A trial balance is usually prepared at the end of a period. It can be prepared daily, weekly, monthly, quarterly, half yearly or a year. In an accounting software application package, trial balance is updated immediately a new transaction is entered.

Read also: The principles of double entry.

USES OF TRIAL BALANCE

(1) It is used to test the arithmetic accuracy of the ledgers. The debit side of a trial balance is expected to be equal to the credit side. Therefore, if the ledger postings are accurate, it will reflect in the trial balance.

(2) It is used to detect errors in posting to ledger account.

(3) Trial balance can be adjusted to reflect end of the year adjustments.

(4) Trial balance is used to prepare the financial statements of an entity.

Read also: IAS1- General purpoae financial statement.

                FORMAT OF A TRIAL BALANCE

                                 BOBO PLC

READ ON  LEARN ABOUT TYPES OF FINANCE RISK THAT CAN AFFECT YOUR BUSINESS

         TRIAL BALANCE AS ON 30TH JUNE, 2016.

                                                                    DR.            CR.
                                                                     N                N
Capital                                                                           xx

Turnover                                                                       xx

Account Receivables & payables            xx              xx

Returns                                                        xx              xx

READ ON  WHAT INTERNAL CONTROL CAN DO AND CAN NOT DO FOR YOUR BUSINESS

Cash and cash equivalents                       xx

Investments                                                xx

Loan and Debentures                                                  xx

Intangible assets                                        xx

Expenses                                                     xx

Non current assets                                    xx

Inventories                                                  xx

READ ON  CONTROL OVER CASH

Discount                                                      xx                xx

Purchases                                                    xx      

                                                                     xxx              xxx

NOTE: The debit side and the credit side must be the same figure.  Discount allowed is on debit side while discount received is on credit side. Return inwards is on debit side and return outwards is on credit side.

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