trial balance
What is a trial balance? It is a list of names and balances of general ledger accounts that is usually prepared at the end of each month in order to check the balance of general ledger accounts and is used as a basis for preparing financial statements.
Therefore, to prepare a trial balance, we write the name of each account and its balance in a debtor or creditor column, as a result, the total balance of the debit accounts should be equal to the total of the accounts with credit balances.
The trial balance is usually prepared in two ways:
A two-column trial balance
B four-column test alignment
A: To prepare a two-column trial balance, we only write the balance of each account.
: To prepare a four-column trial balance, we write the sum of the debit turnover of each account and the sum of the credit turnover and the debit and credit balance of the relevant account.
Correction of trial balance errors
Selecting the trial balance title for the balance list of general ledger accounts; It is a very good choice. This list of account balances is prepared in order to test the equality of debtors and creditors. If the sum of debtors (the balance of debtor items) and the sum of creditors (the balance of creditor items) are not equal; As a result, mistakes have been made.
by calculating the difference between the sum of debtors and creditors; Some errors can be detected. In this regard, the step-by-step method will be as follows
An account may have been removed from the trial balance; therefore; Track the transfer of all accounts and their balances from the journal to the general ledger.
The difference may have originated from the registration in the newspaper or the transfer to the general ledger. Search the journal for the difference amount. Let’s assume that the sum total of the debtors column of the trial balance of the processing institution is equal to 50,100 Rials and the total sum of the creditors column of this institution is 49,900 Rials. Now, an exchange in the amount of 200 rials may have been wrongly recorded in the newspaper or it may have been wrongly transferred to the general ledger. So look for an exchange of 200 riyals.
Divide the difference between the sum of debtors and creditors by 2. If the difference is divisible; Probably, the difference is caused by the wrong registration of a debtor on the side of the creditor or vice versa. For example, suppose that in an exchange of 300 rials, instead of lending cash, Mr. Hosseini; has owed As a result, the sum of debtors will be 300 rials more than the actual amount and the sum of creditors will be 300 rials less than the actual amount. Therefore, there is a total error of 600 Rials between the sum of the Debtors and Creditors column, which if we divide it by 2, the answer will be 300 Rials. So, you should look for a transaction of 300 riyals in the newspaper office and track the affected account.
Divide the amount of the difference by nine. If the difference was divisible by nine; The mistake may be caused by a mistake in recording the numbers (for example, writing 61 instead of 610) or inverted writing (for example, writing 16 instead of 61 9). Suppose Mr. Hosseini wrote the balance of his withdrawal account in the trial balance as 21,000 Rials instead of 2,100 Rials. Therefore, the sum of the debtors column of the trial balance will be 18,900 Rials (2,100 – 21,000) more than the sum of its creditors. Trace this amount among the ledger accounts until you reach Mr. Hosseini’s withdrawal account, which has a balance of 2,100 Rials. Such mistakes do not occur in computerized financial systems.
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This post is written by farzadsarkhani