Martin Quinn Notes

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Lecturer: Martin Quinn

ATI (accounting technician) notes

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Martin Quinn Notes

  1. 1. The Trial Balance
  2. 2. 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. 2 Martin Quinn, 2009
  3. 3. Purpose of the trial balance  A trial balance checks that double entry system works  Used as basis for preparation of final accounts 3 Martin Quinn, 2009
  4. 4. Trial balance  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 accounts 4 Martin Quinn, 2009
  5. 5. Example Trial balance Dr Cr Bank 1,000 Creditors 3,000 Fixed Assets 3,000 Stocks 1,200 Capital 1,200 5,200 5,200 Martin Quinn/Wood/Sangster: Business Accounting 1, 10e, © Pearson Education Limited 2005
  6. 6. Should the TB always balance?  Yes  If not, need to check accounts/balances for errors 6 Martin Quinn, 2009
  7. 7. Trial Balance  It does not balance ???  Arithmetic errors  Extraction errors  Posting errors  one sided entry  entered twice on same side  transposed or incorrect figures 7 Martin Quinn, 2009
  8. 8. Trial Balance  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 8 Martin Quinn, 2009

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