Tuesday, 24 July 2012

Extract a Trial Balance

Now we move to a trial balance. This can be an accountant’s best friend or worst enemy. This is a list of nominal ledger accounts that a company has. It is made up of credits and debits. The purpose of a trial balance as it states in its name is to balance! All debits must be equal to all credits. Remember the rule there are two sides to every transaction. If they do not balance there is either a forgotten figure left out, human error or that figures have been added incorrectly into the books.
Looking for errors can be quite tedious which makes you question why one becomes an accountant. However when the figures balance it is like heaven, pure bliss. You feel like God and can do anything one the figures balance!
A trial balance is an exponent of double entry bookkeeping, meaning it proves the figures are entered correctly in the accounts by means of double entry.

Let’s see an example of a trial balance. A medium sized company called Bapple Inc. ask their accountant to prepare a trail balance from their company’s books for the year. The results are as follows.

As shown above the trial balance balances! All debits are on one side and all credits are on the other.

Check out this link to see another example to see a trial balance put together:

Preparing Trial Balance - Ch. 2 Video 3  

Uploaded by on May 18, 2010

To see a more detailed definition of a trial balance check out this link:        

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