c hapter 4 account balances & trial balance. c alculating the b alance of a t-a ccount step 1...
TRANSCRIPT
CHAPTER 4 Account Balances & Trial Balance
CALCULATING THE BALANCE OF A T-ACCOUNT
Step 1 – Draw a line across the account at the end of the numbers and add the 2 sides of the account separately. These are called pencil footings.
Step 2 – Subtract the smaller total from the larger the total. Write the result beneath the larger of the 2 numbers and circle it. This is the account balance.
Bank10540 300 800 432
TRIAL BALANCE
Is a listing of the account balances found in a ledger.
It is used to see if:total debits = total credits.
It does not find all mistakes but it checks if the accounts balance.
CREATING A TRIAL BALANCE
Step 1 – Set up the Heading – Who? What? When?Step 2 – List all the accounts.Step 3 – Place the debit balances in the debit
column and the credit balances in the credit column.
Step 4 – Add up the 2 columns.Step 5 – Compare the totals and ensure that they
agree. If they do not agree, investigate why.
WHAT IF THE TRIAL BALANCE DOES NOT BALANCE??? YIKES!!!
Don’t worry! Go through the following steps in order:
1. Re-add the trial balance.2. Check that you have copied the balances
from the ledger correctly.3. Recalculate the ledger (t-account)
balances.4. Check that there is a balanced accounting
entry for each transaction.*You need to balance your trial balance!*
PRACTICE QUESTIONS
Read pg. 98 – 101 in your Textbook about the trial balance
Pg. 101 Review Questions #1, 2, 4, 5, 6, 7 Pg. 101 Exercise #1 Pg. 102 Exercise #2 & 3