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Trial Balance

Trial Balance. Accounting Cycle:. Transaction Occurs Journal entry General Ledger (t-accounts) Trial Balance. The Rule of debiting and crediting accounts:. +. Assets. Owner’s Equity. Liabilities. =. +. -. -. -. +. +.

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Trial Balance

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  1. Trial Balance

  2. Accounting Cycle: Transaction Occurs Journal entry General Ledger (t-accounts) Trial Balance

  3. The Rule of debiting and crediting accounts: + Assets Owner’s Equity Liabilities = + - - - + +

  4. After each entry, the Ledger should be in BALANCE! (A = L + OE) Therefore, to check the accuracy of the Ledger, we prepare a TRIAL BALANCE

  5. A TRIAL BALANCE is a simple procedure used to find out if the ledger is in balance (A = L + OE) The debit entries must equal the debit entries, if not, the ledger is “out of balance”

  6. For a TRIAL BALANCE, we prepare a heading • Who? • What? • When? • Accounts are listed in order of A, L, OE • Account balances are listed in the correct columns, and the column totals should AGREE!!!!

  7. If “OUT OF BALANCE” Re-add the trial balance Check the figures from the ledger to the trial balance Recalculate the account balances Check that the transactions have equal debits and credits

  8. Additional ‘Out of balance’ If difference is divisible by 9; transposition error example: 123  132 If difference is a multiple of 10; addition error

  9. DEBIT = CREDIT

  10. Step 5 of the Accounting Cycle BALANCE SHEET

  11. Homework: Ex. #3 & 5 p. 163-164 (t), p.84 (w) Ex. #2 & 3 p. 83 (t), p. 34 (w) Ex. #3 p. 97 (t), p. 38 (w) Trial Balance: Ex. #1,2,3 p. 101-103 (t), p. 39-40 (w)

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