Trial balance is the basis for preparing all financial statements. It helps detect errors that may have occurred in the general ledger.

Trial balance verifies that the transactions recorded in the general ledger is up to date. The trial balance lists the closing balances of credit and debit transactions over a certain period.

Trial balance is the basis for preparing all financial statements. It helps detect errors that may have occurred in the general ledger.

PREPARING YOUR TRIAL BALANCE

The trial balance equation is: Assets + Expenses +Drawings = Liabilities + Revenue + Owner’s Equity

Verify debit entries are made in the right column, and vice versa.

Consolidate all the balances in the ledger accounts and cash books.

Create columns for account name, debits and credits balances.

List each in appropriate columns

Total the Credit and debit balances, they should be equal.

If it does not balance:

Double check entries from general ledger to trial balance

Double check entries in the general ledger

The equation must balance!

Financial Statements help lenders and investors gauge the financial standing of the business, determine how leveraged the business assets are and to evaluate creditworthiness of the business, in order to make an informed decision as to lend or invest money into the business.

The trial balance equation is: Assets + Expenses +Drawings = Liabilities + Revenue + Owner’s Equity

Consolidate all the balances in the ledger accounts and cash books.

Create columns for account name, debits and credits balances.

List each in appropriate columns

Total the Credit and debit balances, they should be equal.

If it does not balance:

Double check entries from general ledger to trial balance

Double check entries in the general ledger

Verify debit entries are made in the right column, and vice versa.

CONCLUSION:

Financial Statements help lenders and investors gauge the financial standing of the business, determine how leveraged the business assets are and to evaluate creditworthiness of the business, in order to make an informed decision as to lend or invest money into the business.