Trial Balance - Example | Format | How to Prepare Template

A trial balance sheet is a report that lists the ending balances of each account in the chart of accounts in balance sheet order. Bookkeepers and accountants ... Skiptocontent Menu Home»FinancialAccountingBasics»TrialBalance WhatisaTrialBalance? Atrialbalancesheetisareportthatliststheendingbalancesofeachaccountinthechartofaccountsinbalancesheetorder.BookkeepersandaccountantsusethisreporttoconsolidatealloftheT-accountsintoonedocumentanddoublecheckthatall transactions wererecordedin properjournalentryformat. Bookkeeperstypicallyscantheyear-endtrialbalanceforpostingerrorstoensurethattheproperaccountsweredebitedandcreditedwhilepostingjournalentries.Internalaccountants,ontheotherhand,tendtolookatglobaltrendsofeachaccount.Forinstance,theymightnoticethataccountsreceivableincreaseddrasticallyovertheyearandlookintothedetailstoseewhy. Taxaccountantsandauditorsalsousethisreporttopreparetaxreturnsandbegintheauditprocess.TheTBformatlendsitselftoawidevarietyofuses. TrialBalanceFormat Thetrialbalanceformatiseasytoreadbecauseofitscleanlayout.Ittypicallyhasfourcolumnswiththefollowingdescriptions:accountnumber,name,debitbalance,andcreditbalance.It’salwayssortedbyaccountnumber,soanyonecaneasilyscandownthereporttofindanaccountbalance.Thisorderalsotendstobeinbalancesheetordersincetheaveragechartofaccountsfollowstheaccountingequationstartingwiththeassets. NotallaccountsinthechartofaccountsareincludedontheTB,however.Usuallyonlyactiveaccountswithyear-endbalanceareincludedintheTBbecauseaccountswithzerobalancesdon’tmakeitonthefinancialstatements.Forexample,ifacompanyhadavehicleatthebeginningoftheyearandsolditbeforeyear-end,thevehicleaccountwouldnotshowupontheyear-endreportbecauseit’snotanactiveaccount. Thereportalsototalsthedebitandcreditcolumnsatthebottom.Aswithallfinancialaccounting,thedebitsmustequalthecredits.Ifit’soutofbalance,somethingiswrongandthebookkeepermustgothrougheachaccounttoseewhatgotpostedorrecordedincorrectly. Thisstepsavesalottimeforaccountantsduringthefinancialstatementpreparationprocessbecausetheydon’thavetoworryaboutthe balancesheet and incomestatement beingoffduetoanout-of-balanceerror.Keepinmind,thisdoesnotensurethatalljournalentrieswererecordedaccurately.Itjustmeansthatthecreditsanddebitsbalance. Ajournalentryerrorcanstillexist.Forinstance,inourvehiclesaleexamplethebookkeepercouldhaveaccidentallydebitedaccountsreceivableinsteadofcashwhenthevehiclewassold.Thedebitswouldstillequalthecredits,buttheindividualaccountsareincorrect.Thistypeoferrorcanonlybefoundbygoingthroughthetrialbalancesheetaccountbyaccount. Sincemostcompanieshavecomputerizedaccountingsystems,theyrarelymanuallycreateaTBorhavetocheckforout-of-balanceerrors.Theycomputersystemdoesthatautomatically. PreparationandProcess HowistheTrialBalancePrepared? Whentheaccountingsystemcreatestheinitialreport,itisconsideredan unadjustedtrialbalance becausenoadjustmentshavebeenmadetothechartofaccounts.Thisissimplyalistofalltheaccountbalancesstraightoutoftheaccountingsystem. Asthebookkeepersandaccountantsexaminethereportandfinderrorsintheaccounts,theyrecordadjustingjournalentriestocorrectthem.Aftertheseerrorsarecorrected,theTBisconsideredan adjustedtrialbalance. Westillaren’tdonewiththisreportyetthough.Theerrorshavebeenidentifiedandcorrected,buttheclosingentriesstillneedtobemadebeforethisTBcanusedtocreatethefinancialstatements.Aftertheclosingentrieshavebeenmadetoclosethetemporaryaccounts,thereportiscalledthe post-closingtrialbalance. Let’stakealookatanexample. Example HowtousetheTrialBalance Here’sanexampletrialbalance.Asyoucansee,thereporthasaheadingthatidentifiesthecompany,reportname,anddatethatitwascreated.Theaccountsarelistedontheleftwiththebalancesunderthedebitandcreditcolumns. Sincethedebitandcreditcolumnsequaleachothertotalingazerobalance,wecanmoveintheyear-endfinancialstatementpreparationprocessandfinishtheaccountingcyclefortheperiod.   GeneralJournalChartofAccounts Contents1WhatisaTrialBalance?2TrialBalanceFormat3PreparationandProcess3.1HowistheTrialBalancePrepared?4Example4.1HowtousetheTrialBalance Searchfor: AccountingBasics Home AccountingTopics Resources Careers [i][i]