Trial Balance - Overview, What's Included, and Examples

A trial balance includes a list of all general ledger account totals. Each account should include an account number, description of the account, ... Home›Resources›Knowledge›Accounting›TrialBalance TrialBalance Areportthatliststhebalancesofallthecompany'sgeneralledgeraccounts Writtenby CFITeam UpdatedJanuary25,2022 WhatisaTrialBalance? Atrialbalanceisareportthatliststhebalancesofallgeneralledgeraccountsofacompanyatacertainpointintime.Theaccountsreflectedonatrialbalancearerelatedtoallmajoraccountingitems,includingassets,liabilities,equity,revenues,expenses,gains,andlosses.Itisprimarilyusedtoidentifythebalanceofdebitsandcreditsentriesfromthetransactionsrecordedinthegeneralledgeratacertainpointintime. BelowisanexampleofaCompany’sTrialBalance: Inadditiontoerrordetection,thetrialbalanceispreparedtomakethenecessaryadjustingentriestothegeneralledger.Itispreparedagainaftertheadjustingentriesarepostedtoensurethatthetotaldebitsandcreditsarestillbalanced.Itisnotanofficialfinancialstatement.Itisusuallyusedinternallyandisnotdistributedtopeopleoutsidethecompany. WhatDoesaTrialBalanceInclude? Atrialbalanceincludesalistofallgeneralledgeraccounttotals.Eachaccountshouldincludeanaccountnumber,descriptionoftheaccount,anditsfinaldebit/creditbalance.Inaddition,itshouldstatethefinaldateoftheaccountingperiodforwhichthereportiscreated.Themaindifferencefromthegeneralledgeristhatthegeneralledgershowsallofthetransactionsbyaccount,whereasthetrialbalanceonlyshowstheaccounttotals,noteachseparatetransaction. Finally,ifsomeadjustingentrieswereentered,itmustbereflectedonatrialbalance.Inthiscase,itshouldshowthefiguresbeforetheadjustment,theadjustingentry,andthebalancesaftertheadjustment. UndetectableErrorsinaTrialBalance Atrialbalancecantracethemathematicalinaccuracyofthegeneralledger.However,thereareanumberoferrorsthatcannotbedetectedbythisreport: Errorofomission: Thetransactionwasnotenteredintothesystem. Erroroforiginalentry:Thedouble-entrytransactionincludesthewrongamountsonbothsides. Errorofreversal: Whenadouble-entrytransactionwasenteredwiththecorrectamounts,buttheaccounttobedebitediscreditedandtheaccounttobecreditedisdebited. Principleerror: Theenteredtransactionviolatesthefundamentalprinciplesofaccounting.Forexample,theamountenteredwascorrectandtheappropriatesidewaschosen,butthetypeofanaccountwaswrong(e.g.,expenseaccountinsteadofliabilityaccount). Commissionerror: Thetransactionamountiscorrect,buttheaccountdebitedorcreditediswrong.Itissimilartotheprincipleerrordescribedabove,butcommissionerrorisusuallyaresultofoversight,whileprincipleerrorisaconsequenceofalackofknowledgeofaccountingprinciples.YoucanlearntheFundamentalsofAccounting withCFI’sFreeCourse! AdditionalResources ThankyouforreadingCFI’sguidetoTrialBalance.Fromhere,werecommendcontinuingtobuildoutyourknowledgeandunderstandingofmorecorporatefinancetopicssuchas:  Howthe3FinancialStatementsareLinked  Bookkeeper BalanceSheet AccountingFundamentalsCourse Sharethisarticle GetCertifiedfor
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