trial balance

Examples of trial balance in the following topics:

• The Post-Closing Trial Balance

  • A post-closing trial balance is a trial balance taken after the closing entries have been posted.
  • The post-closing trial balance is the last step in the accounting cycle.
  • The permanent balance sheet accounts will appear on the post-closing trial balance with their balances.
  • When the post-closing trial balance is run, the zero balance temporary accounts will not appear.
  • As with the trial balance, the purpose of the post-closing trial balance is to ensure that debits equal credits.

• The Trial Balance

  • During the accounting cycle, a trial balance is prepared.
  • The trial balance tests the equality of a company's debits and credits.
  • The trial balance is usually prepared by a bookkeeper or accountant.
  • Recording the balance of an account incorrectly in the trial balance.
  • Then another trial balance is run.

• Preparing Financial Statements

  • Preparing financial statements requires preparing an adjusted trial balance, translating it into financial reports, and auditing them.
  • The process of preparing the financial statements begins with the adjusted trial balance.
  • Preparing the adjusted trial balance requires "closing" the book and making the necessary adjusting entries to align the financial records with the true financial activity of the business.
  • Using the trial balance, the company then prepares the four financial statements.
  • Information flows from the unadjusted trial balance to the trial balance then to the income statement.

• The Accounting Cycle

  • A particular working document called an unadjusted Trial balance is created.
  • This lists all the balances from all the accounts in the Ledger.
  • Notice that the values are not posted to the trial balance, they are merely copied.
  • These values are then passed through the accounting system resulting in an adjusted Trial balance.
  • Financial statements are drawn from the trial balance which may include: the Income statement, the Balance sheet, and the Cash flow statement.

• An Expanded Equation

  • Preparing financial statements requires preparing an adjusted trial balance, translating that into financial reports, and having those reports audited.
  • The process of preparing the financial statements begins with the adjusted trial balance.
  • Preparing the adjusted trial balance requires "closing" the book and making the necessary adjusting entries to align the financial records with the true financial activity of the business.
  • Using the trial balance, the company then prepares the four financial statements.
  • The Balance Sheet: A summary of the company's assets, liabilities and equity;

• Inputs to Accounting

  • The balance sheet is a statement showing net worth on a particular date.
  • The bookkeeper brings the books to the trial balance stage.
  • An accountant may prepare the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
  • The extraction of account balances is called a trial balance.
  • The purpose of the trial balance is, at a preliminary stage of the financial statement preparation process, to ensure the equality of the total debits and credits.

• What Is the Accounting Cycle?

  • Prepare a trial balance of the accounts and complete the worksheet (includes adjusting entries).
  • The trial balance proves that the books are in balance or that the debits equal the credits.
  • From the trial balance, a company can prepare their financial statements.
  • After those entries are made, a post-closing trial balance is run.
  • The post-closing trial balance verifies the debits equal the credits and that all beginning balances for permanent accounts are in place.

• Accounting Flows and Cash Flows

  • Trial Balance – a calculation to verify that the sum of the debits equals the sum of the credits.
  • If they don't balance, you have to fix the unbalanced trial balance before you go on to the rest of the accounting cycle.
  • Adjusted trial balance – make sure the debits still equal the credits after making the period end adjustments.
  • Financial Statements – prepare income statement, balance sheet, statement of retained earnings and statement of cash flows.
  • Closing entries – prepare and post closing entries to transfer the balances from temporary accounts.

• Recognizing Notes Receivable

  • These assets represent rights to receive future payments that are not due at the balance sheet date.
  • To present an accurate picture of the affairs of the business on the balance sheet, firms recognize these rights at the end of an accounting period by preparing an adjusting entry to correct the account balances.
  • The ending balance on the trial balance sheet for accounts receivable is usually a debit.
  • Companies have two methods available to them for measuring the net value of accounts receivable, which is generally computed by subtracting the balance of an allowance account from the accounts receivable account.
  • The first method is the allowance method, which establishes a contra-asset account, allowance for doubtful accounts, or bad debt provision, that has the effect of reducing the balance for accounts receivable.

• Checks and Balances

  • To get the three branches of government to cooperate, a system of checks and balances was created to achieve a fair separation of powers.
  • Through this system, each branch of government "checks," or limits, the other two so that the power shared between them is balanced.
  • However, the legislative branch can overturn this veto with a two-thirds majority in both of the houses, thus maintaining the balance.
  • The Chief Justice presides in the Senate during a president's impeachment trial.
  • Discuss the details of the Constitution's system of checks and balances