4.7 Checking the Trial Balance
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VCE Accounting Unit 3. Video of this presentation can be found on my YouTube channel here https://www.youtube.com/channel/UCf5jyuJoYwie8tWfvjEc0zg.
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4.7 Checking the Trial Balance
- 2. Video of this presentation at… YouTube Channel for VCE Accounting
- 3. © Michael Allison. Author’s permission required for external use. But even if a Trial Balance is in balance, there can still be errors within it… Example: entering the wrong amount on both sides, e.g. recording a payment to creditors of $10,000 as only $8,000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 12000 Creditors 4000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 55000 55000 4.7 CHECKING THE TRIAL BALANCE Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Correct version Incorrect version Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 12000 Creditors 4000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 55000 55000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 12000 Creditors 4000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 55000 55000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Correct Assets = Liabilities + Owner’s Equity Cash 10,000 Creditors 10,000 Incorrect Assets = Liabilities + Owner’s Equity Cash 8,000 Creditors 8,000 Assets = Liabilities + Owner’s Equity Cash 10,000 Creditors 10,000 Assets = Liabilities + Owner’s Equity Cash 10,000 Creditors 10,000 Assets = Liabilities + Owner’s Equity Cash 8,000 Creditors 8,000 Assets = Liabilities + Owner’s Equity Cash 8,000 Creditors 8,000
- 4. © Michael Allison. Author’s permission required for external use. But even if a Trial Balance is in balance, there can still be errors within it… Example: entering a DEBIT and/or CREDIT in the wrong accounts e.g. putting a DEBIT of $1,000 for rent in the advertising ledger Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 14000 Loan – NAB 4000 Advertising 1000 Sales 21000 Capital 23500 53000 53000 4.7 CHECKING THE TRIAL BALANCE Correct version Incorrect version Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 14000 Loan – NAB 4000 Advertising 1000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 14000 Loan – NAB 4000 Advertising 1000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Correct Assets = Liabilities + Owner’s Equity Cash 1,000 Capital 1,000 Incorrect Assets = Liabilities + Owner’s Equity Cash 1,000 Capital 1,000 Assets = Liabilities + Owner’s Equity Cash 1,000 Capital 1,000 Assets = Liabilities + Owner’s Equity Cash 1,000 Capital 1,000 Assets = Liabilities + Owner’s Equity Cash 1,000 Capital 1,000 Assets = Liabilities + Owner’s Equity Cash 1,000 Capital 1,000
- 5. © Michael Allison. Author’s permission required for external use. But even if a Trial Balance is in balance, there can still be errors within it… Example: reversing the DEBIT and CREDIT entries Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Creditors 2000 Cash at Bank 10000 GST Liability 1500 Stock 25000 Accrued wages 1000 Wages 3000 Loan – NAB 4000 Rent 15000 Sales 21000 Capital 23500 53000 53000 4.7 CHECKING THE TRIAL BALANCE Correct version Incorrect version Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Creditors 2000 Cash at Bank 10000 GST Liability 1500 Stock 25000 Accrued wages 1000 Wages 3000 Loan – NAB 4000 Rent 15000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Creditors 2000 Cash at Bank 10000 GST Liability 1500 Stock 25000 Accrued wages 1000 Wages 3000 Loan – NAB 4000 Rent 15000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000
- 6. © Michael Allison. Author’s permission required for external use. But even if a Trial Balance is in balance, there can still be errors within it… Example: omitting a transaction completely, e.g. $1,000 paid to creditors 4.7 CHECKING THE TRIAL BALANCE Correct Incorrect Assets = Liabilities + Owner’s Equity Cash 1,000 Creditors 1,000 Assets = Liabilities + Owner’s Equity Assets = Liabilities + Owner’s Equity Cash 1,000 Creditors 1,000 Assets = Liabilities + Owner’s Equity Cash 1,000 Creditors 1,000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 11000 Creditors 3000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 54000 54000 Correct version Incorrect version Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 11000 Creditors 3000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 54000 54000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 11000 Creditors 3000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 54000 54000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000
- 7. © Michael Allison. Author’s permission required for external use. But even if a Trial Balance is in balance, there can still be errors within it… Example: recording the same transaction twice, e.g. entered wages of $3,000 twice 4.7 CHECKING THE TRIAL BALANCE Correct Incorrect Assets = Liabilities + Owner’s Equity Cash 6,000 Capital 6,000 Assets = Liabilities + Owner’s Equity Cash 3,000 Capital 3,000 Assets = Liabilities + Owner’s Equity Cash 3,000 Capital 3,000 Assets = Liabilities + Owner’s Equity Cash 3,000 Capital 3,000 Assets = Liabilities + Owner’s Equity Cash 6,000 Capital 6,000 Assets = Liabilities + Owner’s Equity Cash 6,000 Capital 6,000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 7000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 6000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Correct version Incorrect version Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 7000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 6000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 7000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 6000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000 Trial Balance as at 31 March 2015 DEBIT Balances $ CREDIT Balance $ Cash at Bank 10000 Creditors 2000 Stock 25000 GST Liability 1500 Wages 3000 Accrued wages 1000 Rent 15000 Loan – NAB 4000 Sales 21000 Capital 23500 53000 53000
- 8. © Michael Allison. Author’s permission required for external use. TASK In-class Homework SQ10 X