Trial Balance

 

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In today’s Business Studies class, We will be learning about Trail Balance. We hope you enjoy the class!

 

trial balance business studies classnotesng

A trial balance is a list of debit and credit balances extracted from the ledger. The trial balance shows the arithmetical accuracy of ledger entries. Double-entry bookkeeping requires that the totals of the debit column and that of the credit column of the trial balance agree.

Where the two sides of a trial balance do not agree, this suggests the presence of one or more errors in the ledger. However, the agreement of a trial balance does not necessarily mean that the accounts are without error as there are some errors that can occur but would not affect the agreement of a trial balance.

USES OF A TRIAL BALANCE

  1. The trial balance is used to show the arithmetical accuracy of postings made in the ledger
  2. The trial balance shows the summarized form of the balances of accounts in the general ledger at a glance
  3. It helps in the preparation of trading account, profit and loss account and the balance sheet.

FORMAT OF A TRIAL BALANCE

Lucy Enterprises

Trial Balance As At 31st December 2002

Particular                    Folio                              DR                   CR


N                       N

 

 

ILLUSTRATION 1

Prepare a trial balance from the following accounts:

Creditors. N2784, bank overdraft N1980 and Purchases N4764

SOLUTION

                                      

ILLUSTRATION 2

Prepare a trial balance from the ledger account balances:

Capital   N1, 000, Creditors  N100, Purchases N4764, Sales N5194,

Stocks    N480, Debtors N100 and Cash N950

SOLUTION

EVALUATION

  • State the rules of posting entries into the trial balance
  • State two uses of a trial balance

 READING ASSIGNMENT  

Business Studies for Junior Secondary Schools, Book 3 by O.A .Lawal et al pages 60-71

 GENERAL REVISION QUESTIONS

  1. What is a cash book?
  2. Mention the types of cashbook.
  3. State the principle of double-entry.
  4. Draw the format of a ledger.
  5. Which type of cash book is similar to the format of a ledger?

 WEEKEND ASSIGNMENT

  1. All expenses are ———– in the trial balance  A. debited       credited      C.  added      D.  deducted

2) All liabilities and incomes should be ——— A. debited      B  earmarked       C  credited       D  added

3) Which of the following is credited in the trial balance? A  Loan     B  Purchases      C  Wages       D  rent

4) Drawings are ————- in the trial balance A. credited     B.  debited      C  added      D  deducted

5) All liabilities are ———— in the trial balance A  debited      B.  credited       C.  added       D.  deducted

 

 

THEORY

  • What is a trial balance?
  • Sketch a format of the trial balance with at least seven entries on the credit side and fifteen entries on the debit side.

 

 

 

We have come to the end of this class. We do hope you enjoyed the class?

Should you have any further question, feel free to ask in the comment section below and trust us to respond as soon as possible.

In our next class, we will be talking about Balance Sheet. We are very much eager to meet you there.

 

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