TRIAL BALANCE
A trial balance is a list of all ledger account balances of a business
at any particular time. Because the double-entry system is self-balancing,
the total of the debit balances will be exactly equal to the total of
the credit balances. This means that the trial balance is useful for
checking the accuracy of the double entry process before closing-off
the accounts.
However, a trial balance will not disclose the following types of errors:
The complete omission of transaction (because neither a debit nor a
credit is made).
The posting of a debit or a credit to the correct side of the ledger,
but to the wrong account.
Compensation errors:
Errors of principle, eg, cash received from debtors being debited to the
debtors account and credited to cash instead of the other way round.
The trial balance is prepared as follows:
Trial Balance As At 28 Feb 1986
 |
| | | | |
|
| | | Dr | | Cr |
| Cash | | 840 | | |
| Capital | | | | 1350 |
| Motor Vehicle | | 190 | | |
| Shop fittings | | 400 | | |
| Purchases | | 485 | | |
| Bank overdraft | | | | nil |
| Creditors | | | | 620 |
| Cost of sales | | 1525 | | |
| Debtors | | 280 | | |
| Sales | | | | 2470 |
| Discount received | | | | 35 |
| Expenses | | 160 | | |
| Drawings | | 550 | | |
| Bank Charges | | 15 | | |
| Bad Debts | | 30 | | |
|
| | | | |
| | | 4475 | | 4475 |
| | | | |
|
| | | | |
|
