Trial Balance
Module 1:
Foundations of Accounting
Duration:
45-60 minutes
Level:
Beginner to Diploma-Level
Lesson Objectives
➛ Understand what a Trial Balance is and why it is important.
➛ Prepare a simple Trial Balance from ledger balances.
➛ Identify if a trial balance is balanced or not.
➛ Detect basic posting errors through trial balance differences.
Key Vocabulary
➛ Trial Balance
➛ Ledger Balance
➛ Debit Balance
➛ Credit Balance
➛ Totals
➛ Balancing
What is a Trial Balance?
A Trial Balance is a statement that lists every account with its closing balance.
We prepare it to:
➛ Check that total debits = total credits
➛ Detect basic posting mistakes
➛ Prepare financial statements
Format of a Trial Balance
Account
Cash
Accounts Payable
Cash
Accounts Payable
Debit
4,900
4,900
Credit
1,200
1,200
All accounts must appear once, either in debit or credit.
Steps to Prepare a Trial Balance
➛ Look at each ledger.
➛ Determine if the balance is Debit or Credit.
➛ List every account with its balance in the correct column.
➛ Add totals.
➛ Check if Dr = Cr.
Example Using Class 10 Account Balances
Cash
Staionary Expense
Rent Expense
Capital
Sales
Accounts Payable
Equipment
Staionary Expense
Rent Expense
Capital
Sales
Accounts Payable
Equipment
4,900
200
300
5,000
400
1,200
1,200
200
300
5,000
400
1,200
1,200
Trial Balance
Account
Cash
Staionary Expense
Rent Expense
Equipment
Capital
Sales
Accounts Payable
Totals
Cash
Staionary Expense
Rent Expense
Equipment
Capital
Sales
Accounts Payable
Totals
Debit
4,900
200
300
1,200
6,600
4,900
200
300
1,200
6,600
Credit
5,000
400
1,200
6,600
5,000
400
1,200
6,600
Balanced!
Place Balances in the Correct Column
Cash
Furniture
Accounts Receivable
Capital
Sales
Electricity Expense
Accounts Payable
Furniture
Accounts Receivable
Capital
Sales
Electricity Expense
Accounts Payable
Dr 3,200
Dr 1,000
Dr 600
Cr 4,000
Cr 1,500
Dr 300
Cr 600
Dr 1,000
Dr 600
Cr 4,000
Cr 1,500
Dr 300
Cr 600
Task
Create a trial balance table.
Identify Errors
Say whether the trial balance is "Correct" or "Incorrect"
➛ Total Debits = 7,500 and Total Credits = 7,500
➛ Total Debits = 4,800 and Total Credits = 5,200
➛ The Cash account (Debit) was mistakenly placed in the Credit column
➛ Electricity Expense was left out of the trial balance
➛ Capital account was placed on the Debit side instead of Credit
Answers ➧ Here
Accounting Errors & Suspense Accounts ➧ Here