Trial Balance

Trial Balance

Debit or Credit?

Multiple Select

A liability has which of the following as a normal balance...

• Debit

• Credit

• Neither

Multiple Select

An asset's normal balance is usually...

• Debited

• Credited

Multiple Choice

Capital in a business is always under the normal balance of being..

• Debited

• Credited

• Part of Owner Equity

• None of the above

Open Ended

What are the normal balances for Revenues and Expenses?

What is a Trial Balance?

It is a list of closing balances of ledger accounts on a certain date and is the first step towards the preparation of financial statements. It is usually prepared at the end of an accounting period to assist in the drafting of financial statements.

Purpose of the Trial Balance

• Trial Balance acts as the first step in the preparation of financial statements. It is a working paper that accountants use as a basis while preparing financial statements.

•  Checks the arithmetical accuracy of the double entry transactions of the business

Advantages of using the Trial Balance

• To check the debits, equal the credits       

• To find the uncover errors in journalizing

• To locate the errors in ledger accounts

Disadvantages of the Trial Balance

• It does not prove that all transactions have been recorded

• It does not prove that the ledger is correct

• Numerous errors may exist even though the trial balance columns agree