- The ledger should be balanced after each full accounting entry. Periodically it is necessary to check the accuracy of the ledger. This is done by doing a trial balance.
- A trial balance is a listing of the account balances in a ledger. You must add up all of the debit balances, and all of the credit balances to see if the two totals are the same.
- If they agree, the ledger is said to be in balance. If they do not agree, the ledger is said to be out of balance.
- In manual accounting systems the whole process called taking off a trial balance, was usually done at the end of each week or month. (Accounting software lets you do a trial balance as often as you wish).
Methods of Taking off a Trial Balance
Can We Help with Your Assignment?
Let us do your homework! Professional writers in all subject areas are available and will meet your assignment deadline. Free proofreading and copy-editing included.
- List all of the accounts and their balances. Leave room for a three-line heading.
- Place the debit balances in a debit column and the credit balances in a credit column.
"Be Bold" No-Essay $10,000 Scholarship
The $10,000 “Be Bold” Scholarship is a no-essay scholarship that will be awarded to the applicant with the boldest profile. To us, boldest does not mean “best”, or “most accomplished”. Being bold means being: Earnest, Determined, Moving. The scholarship will be awarded to the student whose profile is most bold, according to these characteristics.
- Add up the two columns.
- See if the two columns are the same. Only if the columns are the same can you consider your ledger work to be correct.
- Write a heading at the top. A heading is necessary on the trial balance. It must show the name of the individual or business, the title “Trial Balance” and, very importantly, the date.
Importance of the Trial Balance
- The accounting work is not accurate if the ledger is not in balance. A ledger out of balance out of balance is a certain sign that at least one error has been made in the accounts.
Trial Balance out of Balance
- If the trial balance is out of balance, at least one error has been made. An accountant must fix these mistakes.
- Even if the ledger is in balance, it might still have errors in it. The accountant may have made incorrect entries that were balanced ones.
- There is a four step procedure to follow if you find a ledger that does not balance:
- Step 1) Re-add the trial balance columns.
- Step 2) Check the figures from the ledger against those of the trial balance. Make sure that none are missing, none are missing, none are on the wrong side, and none are the wrong amount.
- Step 3) Recalculate the account balances.
- Step 4) Check that there is a balanced accounting entry in the accounts for each transaction.
- If all of the steps are done correctly, the errors will be found, and the ledger will be balanced.