What is a Trial Balance which is:

a list of debit and credit balances extracted from the accounts in the ledger at a particular date

Understand the Purpose of a Trial Balance which is:

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The Trial Balance is prepared for the purpose of checking the arithmetical accuracy of the entries made in the ledger. The Trial Balance enable the counter check of the equality of debits and credits after posting ie.

Sum of debits account balance = Sum of the credit accounts balance in the Trial Balance and if not equal, errors in journalizing and posting. Steps involve:
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List the account titles and their balances Total the debit and credit columns Prove the equality of the two columns

Note that a Trial Balance follows the Double Entry or Dual Aspect Concept:
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The total debit balances will be equal to the total credit balances in the Trial Balance if the double-entry principles of recording have been strictly adhered to.

Other salient points:

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An account has a debit balance when its debit total exceeds its credit total An account has a credit balance when its credit total exceeds its debit total Assets, expenses and drawings accounts have debit balances Liability, capital and revenue accounts have credit balances. Purchases, Sales Returns have debit balances Sales, Purchases Returns have credit balances Personal accounts record transactions with persons who have dealng with the business for example debtors and creditors accounts Errors that affect the agreement of the trial balance totals are wrong calculation of balances, omission of either a debit or credit entry of a transaction, entry on the wrong side of an account and errors in amount. Errors that do not affect the agreement of the trial balance totals are complete omission of entries of a transaction errors of commission, errors in principle, compensating errors, complete reversal of entries and errors in original entry.

What is A Trial Balance y A list/statement/worksheet of all the account balances of the general ledger at a particular point in time from which the Income Statement and Balance Sheet of a business is drawn up.

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It is prepared in each financial period as a summary of the closing of the previous ledger which proves the arithmetic accuracy of the ledger entry. In bookkeeping, this is a useful tool for checking the accounting entries prior to doing the periodend processing. Trial Balance reflects all the activity for an account or accounts within a selected date range. It shows the balance of the account at the beginning of the date range, the activity within the date range, and the balance at the end of the date range.

Illustration: Append below is the following balances extracted from the books of A Ltd on 31 December 2006 Credit Bank overdraft Capital (01/01/06) Creditors Profit for the year Loan 7,000 90,000 15,200 58,800 35,000 Fixtures Motor Vehicles Debtors Cash Debit 31,500 20,800 24,000 500

The accumulated depreciation figures were

Motor vehicle $ 6,100 Fixtures $12,200

Question: Complete the trial balance of A Ltd as at 31/12/2006. Solution: Trial Balance Of A Ltd As At 31 December 2006 Debit Premises Creditors Fixtures Overdraft Motor Vehicles Capital Motor Vehicles depreciation Stock Prepayments Accruals Loan Fixtures-depreciation Profit & Loss Account Total ( DEBIT = CREDIT) 224,550 2,700 750 250 3,500 12,200 58,800 224,550 20,800 90,000 6,100 31,500 7000 120,000 15,200 Credit