Trail Balance Introduction grade 10

1. Trail balance
Accounting grade 10
created by Z.P NGUBENI

2. Introduction
What is a trail balance ?
A trail balance is an accounting report/
statement.
That shows the closing balances of all ledger
accounts at a point in time .
As well as the names and values of each
ledger account on the balance sheet section
and the nominal ledger account.

3. Important note
On the trail balance the credit side should
be equal to the debit side
 Meaning the trail balance should balance.
The sum of the debit side must be equal to
the sum of the credit side.
Balances do not proof that the bookkeeping
is free of error.
The trial balance is used to prepare/ create
financial statement therefore, if the trial
balance is not correct financial statements
will not be reliable.

4. How to prepare a trial balance
1
Need
•When preparing a
trail balance, you will
need the following:
2
Balance
•Balance each account
in the general ledger
3
List
•List of all account
with the balances
from the general
ledger
4
Classify
•Classify those
accounts to their
respective elements
(Assets, Equity or
Liability)
5
Record
•Record the accounts
in the correct section
of the trial balance.
(Nominal/Balance)
6
Total
•Total the debit and
the credit column of
the trial balance
This Photo by Unknown Author is licensed under CC BY-SA

5. What you need to
understand –
balance sheet
section
 The trail balance consist of two sections.
 Which are your balance sheet section and your
nominal sheet section
 What goes in the balance sheet section?
 All accounts that are balanced. Meaning your :
1. Assets and liabilities accounts
2. Capital and drawing accounts
 Remember that these four accounts will always
have opening and closing balances. Hence, they are
recorded in the balance sheet section.

6. Nominal sheet
section
What goes to the nominal sheet
section?
 Owners equity accounts are used to
this section.
1. Income accounts
2. Expense accounts
When preparing a trail balance it is
essential to post each account on the
correct side, which can either be the
debit or the credit side.

7. Structure of a trail balance
Description/ Name of account Fol Debit Credit
Balance sheet section
Assets ×××
Liabilities ×××
Capital ×××
Drawings ×××
Nominal sheet section
Expenses ×××
Income ×××

8. Guide to post accounts on the
correct side of trail balance
Three elements
ASSETS = OWNERS EQUITY + LIABILITIES
• All the accounts that will be recorded in the trial
balance can either be one of the 3 accounting
elements.
• Recording the accounts in the correct column is highly
dependents on your understanding of these 3 elements
• The use DEAD & CLIC is to show the increases and
decreases of each element.
• The DEAD team represents all the accounts that
increase on the debit side
• The CLIC team represents all accounts that increase on
the credit side

9. Methods of preparing a
trial balance
• There are 2 methods which can be used to prepare a
trail balance
• Method 1 – the total method
In this method ledger accounts are not balanced, they
are totaled.
• Method 2 – the balanced method
Under this method, closing balances of ledger
accounts are used to prepare a trail balance
Method 3 - Balance totals
Trial Balance is prepared by combining the first and
second methods.

10. Classification
of errors
Errors that are disclosed by Trial Balance.
• Errors of calculation
• Posting to wrong side of an account
• Errors in amounts
• Recording half an entry
Errors that are not disclosed by Trial Balance.
• Errors of Omission
• Errors of Commission
• Errors of Principle
• Compensating Errors
• Errors of Original Entry
• Errors of Complete Reversal

11. Basic Principles of Rectification of Errors
Error Solution
Shortage of debit in one or
more accounts
Additional debit to the
respective accounts
Excess credit in one or more
accounts
Debiting the respective account
with the excess amount involved
Excess debit in one or more
accounts
Credit the excess respective
accounts
Shortage of credit in one or
more accounts
Additional credit to respective
accounts

12. Accounting cycle
Transaction Journal Ledger
Unadjusted trail
balance
Adjusting entries
Adjusted trail
balance

13. REFERENCES
o Chedella , D. (2020, July 13). Trail balance, meaning, rules, proforma, transactions, journal
entries, ledgers, trail balance. Available from SlideShare
https://www.slideshare.net/lalitprasadpatra/trail-balance?qid=a555be1c-6ad1-4418-8174-
b3880f925e53&v=&b=&from_search=2 [Accessed 18 August 2020]
o Hasan , H. (2010, April 20). presentation on general ledger and trail balance.
Available from SlideShare https://www.slideshare.net/kathbirali/presentation-
slide-on-accounting-general-ledger-trial-balance?next_slideshow=1 [Accessed 18
August 2020]
o Kabuye , J. ( 2013, June 21). Preparation of general ledger and trial balance.
Available from SlideShare https://www.slideshare.net/kabuyejames/general-journal-ledger-
trail-balance?qid=a555be1c-6ad1-4418-8174-b3880f925e53&v=&b=&from_search=12 [Accessed
18 August 2020]

14. REFERENCES
Patra , L. (2014, October 20). Trial balance. Available from SlideShare
https://www.slideshare.net/DattasaiCheedella/trail-balance-meaning-rules-
proforma-transactions-journal-entries-ledgers-trail-balance?qid=a555be1c-6ad1-
4418-8174-b3880f925e53&v=&b=&from_search=4 [Accessed 17 August 2020]
Sharma , I. (2018, October 13). Trial balance and rectification of errors. Available
from SlideShare https://www.slideshare.net/itisha89/trial-balance-and-rectification-of-
errors-119312574?qid=a555be1c-6ad1-4418-8174b3880f925e53&v=&b=&from_search=9
[Accessed 17 August 2020]

15. The end.