The trial balance
Total debit entries = Total credit entries
If the the double entry system has been applied correctly……
For each debit entry there is a credit entry.
For each credit entry there is a debit entry.
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Purpose of the trial balance
A trial balance checks that double entry system works
Used as basis for preparation of final accounts
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Once all entries have been made correctly, total debits
should equal total credits
A list of the balances on all ledger accounts in column format
is called a trial balance
A trial balance checks that the double entry system is
working correctly and allows the preparation of final
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Should the TB always balance?
If not, need to check accounts/balances for errors
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It does not balance ???
one sided entry
entered twice on same side
transposed or incorrect figures
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Will not show
Errors of omission – transaction left out completely
Errors of commission – correct amounts, wrong account(s)
Errors of principle – e.g. posted a capital expense as revenue expense
Compensating errors – errors which cancel each other out
Reversal of entries – wrong sides of each account used
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