Republic of the Philippines
BOHOL ISLAND STATE UNIVERSITY
Candijay Campus
Cogtong, Candijay, Bohol
COLLEGE OF ADVANCED STUDIES
Subject Code: EDMA 507
Course Title: FINANCIAL MANAGEMENT IN EDUCATION
TRIAL BALANCE
CARMEN A. MUTIA
Masterand
MA. MAGDALENA BERNALES PhD
Professor
1
“TRIAL BALANCE ”
CARMEN A. MUTIA
Masterand
What do you know about
Trial Balance ?
INTRODUCTION AND DEFINITION:
• Trial balance is a list of debit and credit balances of all
ledger accounts. It is prepared at the end of an
accounting period.
• Trial balance is prepared in the statement form
which shows debit balances and credit balances of all
accounts in the ledger, therefore it is called as a
“Statement of Balance”
• “Trial balance is a statement, prepared with the debit
and credit balances of ledger accounts to test the
arithmetical accuracy of the books”
Trial Balance is the statement of
balances of all ledger accounts of any
firm on a particular date. The total of
both sides means the debit and credit
sides should be equal, as, for any
transaction, there would be a debit and
credit for the same amount.
INTRODUCTION AND DEFINITION:
“It is a list or abstract of the balances or of total
debits and total credits of accounts in a ledger, with the
purpose being to determine the quality of posted debits
and credits and establish a basic summary for final
statements”
“It is schedule or list of those debit and credit balances
which are extracted from various accounts in the ledger
and balances of cash in hand, Cash at bank as shown by
Cash Book are also included in it
Objectives of trial balance
The objectives of preparing a trial balance are:
 To check the arithmetical accuracy of the ledger
accounts.
 To locate the errors.
 To facilitate the preparation of final accounts.
Advantages of Trial Balance
The advantages of the trial balance are:
i. It helps to ascertain the arithmetical accuracy of the
book-keeping work done during the period.
ii. It supplies in one place ready reference of all the
balances of the ledger accounts.
iii. If any error is found out by preparing a trial balance,
the same can be rectified before preparing final
accounts.
iv. It is the basis on which final accounts are prepared.
Points to be noted :
 Date on which trial balance is prepared should be
mentioned at the top.
 Name of Account column contains the list of all ledger
accounts.
 Ledger folio of the respective account is entered in the next
column.
 In the debit column, debit balance of the respective account
is entered.
 Credit balance of the respective account is written in the
credit column.
 The last two columns are totalled at the end.
 A debit balance is either an asset or loss or expense; and
 A credit balance is either a liability or income or gain.
Limitations of Trial Balance
• Though the trial balance helps to ensure the
arithmetical accuracy of the books of accounts, it is
possible only when the accountant has not committed
any error.
• As all the errors made are not disclosed by the trial
balance, it would not be regarded as a conclusive
proof of correctness of the books of accounts
maintained.
How is trial balance prepared?
To prepare a trial balance, you will need the
closing balances of the general ledger
accounts. The trial balance is prepared after
posting all financial transactions to the
journals and summarizing them on the
ledger statements.
Steps to Locate Errors in a Trial Balance
• Recalculate the balance of each ledger account
• If errors remain undisclosed, verify all the
postings in the ledger from the journal
• Verify all the entries made in the journal from
the vouchers available
• Repeat the above steps until all errors are
detected
What is a trial balance used for?
A trial balance can be used to detect any
mathematical errors that have occurred in a
double entry accounting system. If the total debits
equal the total credits, the trial balance is
considered to be balanced, and there should be
no mathematical errors in the ledgers.
Account
Debit Credit
Cash
53
Accounts receivable 115
Accounts payable
106
Income
191
Wages expense
75
Marketing expense 54
Total
Difference
222
372
150
Unbalanced trial
balance
Account
Debit Credit
Cash
53
Accounts
receivable
115
Accounts payable
106
Income
191
Wages expense
75
Marketing expense 54
Total
Difference
297
297
0
Corrected
trial
balance
Check for the Difference in the Ledger and Trial Balance
The difference calculated above is the amount of the error
in the unbalanced trial balance. A quick check through the
accounts in the ledger should be made to determine
whether a balance has simply been omitted from the trial
balance.
In addition check through the trial balance to see whether
the amount is included but missed from the column
additions.
Divide the Difference by 2
Take the trial balance difference and divide it by 2. Check
the unbalanced trial balance to see whether there is an
account balance for this amount.
Checking for half of the difference will help detect whether
a balance has been included on the wrong side of the
unbalanced trial balance as demonstrated below.
INSIGHTS:
A trial balance is an indispensable financial tool
for business owners, helping them identify errors,
prepare financial statements, and assess their
company's financial health. By understanding the
concept of trial balance and regularly analyzing it,
you can make better-informed decisions and
improve your business performance. Embracing
the right accounting software can further
streamline the process, ensuring accuracy and
efficiency.
REFERENCES
https://www.excel-skills.com/ph/trialbalance-template.php
https://www.wolterskluwer.com/en/solution
s/bizfilings/tools-and-resources/toolsforms/trial-balance-worksheet
https://exceldatapro.com/trial-balancetemplate/