Section 4.4 Trial Balance
The ledger should be balanced after each full accounting entry.
Periodically it is necessary to check the accuracy of the ledger. This is
done by doing a Trial Balance.
A trial balance is a listing of the account balances in a ledger. You
must add up all of the debit balances, and all of the credit balances to
see if the two totals are the same.
If they agree, the ledger is said to be in balance. If they do not agree,
the ledger is said to be out of balance.
In manual accounting systems the whole process called taking off a
trial balance, was usually done at the end of each week or month.
Accounting software lets you take off a Trial Balance as often as you
wish!
The Steps to Taking off a Trial Balance
Step 1.
Write a heading at the top. It must show the name of the individual or
business, the title “Trial Balance” and, very importantly, the date. (The
order is like a Balance Sheet heading: Who, What, When)
Step 2
List the accounts in the order they appear in the ledger (Assets first,
Liabilities second, OE last). This is called “Ledger Order”. Even if an
account has an exceptional balance, list it where it appears in the
ledger (for example, if an A/P liability account has an exceptional debit
balance, still list the A/P in order with the other A/P liability
accounts). If an account has a balance of zero, do NOT include it
on your Trial Balance.
The ledger should be balanced after each full accounting entry.
Periodically it is necessary to check the accuracy of the ledger. This is
done by doing a Trial Balance.
A trial balance is a listing of the account balances in a ledger. You
must add up all of the debit balances, and all of the credit balances to
see if the two totals are the same.
If they agree, the ledger is said to be in balance. If they do not agree,
the ledger is said to be out of balance.
In manual accounting systems the whole process called taking off a
trial balance, was usually done at the end of each week or month.
Accounting software lets you take off a Trial Balance as often as you
wish!
The Steps to Taking off a Trial Balance
Step 1.
Write a heading at the top. It must show the name of the individual or
business, the title “Trial Balance” and, very importantly, the date. (The
order is like a Balance Sheet heading: Who, What, When)
Step 2
List the accounts in the order they appear in the ledger (Assets first,
Liabilities second, OE last). This is called “Ledger Order”. Even if an
account has an exceptional balance, list it where it appears in the
ledger (for example, if an A/P liability account has an exceptional debit
balance, still list the A/P in order with the other A/P liability
accounts). If an account has a balance of zero, do NOT include it
on your Trial Balance.
