Trial BalanceTrial Balance

• A trial balance is a listing of the A trial balance is a listing of the account balances in a ledgeraccount balances in a ledger

• A trial balance is normally performed A trial balance is normally performed once a month at the end of the monthonce a month at the end of the month

• A trial balance is used to ensure that A trial balance is used to ensure that the ledger is always in balance, just as the ledger is always in balance, just as a balance sheet should be balanced so a balance sheet should be balanced so should a ledgershould a ledger

• For a trial balance the accounts of a For a trial balance the accounts of a ledger are listed in a column.ledger are listed in a column.

• The accounts with debit balances The accounts with debit balances (assets) are totalled and compared to (assets) are totalled and compared to the total of the accounts with credit the total of the accounts with credit balances (liabilities and OE)balances (liabilities and OE)

• If the two sums are the same then the If the two sums are the same then the ledger is in balance, if they do not agree ledger is in balance, if they do not agree then the ledger must be out of balancethen the ledger must be out of balance

• How to take off a trial balanceHow to take off a trial balance• 1) title; who, what, when1) title; who, what, when

– Company name, trial balance, dateCompany name, trial balance, date• List the asset accounts (debit balances), then list List the asset accounts (debit balances), then list

liabilities and owners equity (credit balances)liabilities and owners equity (credit balances)• Total the debit (left column) and credit (right Total the debit (left column) and credit (right

column) at the bottom there should be a single column) at the bottom there should be a single line above the total and a double underline line above the total and a double underline

• Column totals must agreeColumn totals must agree

Correcting an incorrect trial Correcting an incorrect trial balancebalance• 1) Re-add the trial balance columns1) Re-add the trial balance columns• 2) Check the numbers in the trial 2) Check the numbers in the trial

balance to the totals in the ledgerbalance to the totals in the ledger• 3) Recalculate the account balances in 3) Recalculate the account balances in

the Ledgerthe Ledger• 4) check that the accounting entries in 4) check that the accounting entries in

the ledger are balanced transactionsthe ledger are balanced transactions

Review questions pg 104Review questions pg 104Complete chapter 4.4 review Questions Complete chapter 4.4 review Questions

and section exercisesand section exercises

Once you have your quiz back check Once you have your quiz back check your answers to the answers provided your answers to the answers provided in First Classin First Class

Start on Chapter 4.5 Section Exercises Start on Chapter 4.5 Section Exercises pg 107, 1-3pg 107, 1-3

Section Review QuestionsSection Review Questions1.1. Because A=L+OE and all Assets have debit Because A=L+OE and all Assets have debit

balances and Liabilities and Owners Equity balances and Liabilities and Owners Equity have Credit balances the totals will be equalhave Credit balances the totals will be equal

2.2. List all accounts from the ledger on the trial List all accounts from the ledger on the trial balance sheet, total the debits and credits, balance sheet, total the debits and credits, compare the totalscompare the totals

3.3. (this will not be on any test)(this will not be on any test)4.4. It is important to balance the ledger to It is important to balance the ledger to

insure that all work is accurate in accountinginsure that all work is accurate in accounting5.5. Once a monthOnce a month

• 6) It is kept on file6) It is kept on file• 7) A trial balance should be kept on hand 7) A trial balance should be kept on hand

until an audit is preformed or for one yearuntil an audit is preformed or for one year• 8) If the ledger is not balanced after 8) If the ledger is not balanced after

completing all correction steps then you completing all correction steps then you have made an error in correcting have made an error in correcting

• 9) Re-add, check the ledger figures, 9) Re-add, check the ledger figures, recalculate ledger totals, check recalculate ledger totals, check transaction balances transaction balances