5 - From trial balance to final accounts

Question 1

what happens to ledger accounts

Answer 1

once all transactions are recorded, the ledger account must be balanced

Question 2

how is a ledger account balanced

Answer 2

1. add up debit/credit separately
2. put the larger of the two totals as the column total for both debit/credit
3. calculate balancing figure on side with lower total and describe this as the balance carried down
4. show this balancing figure on the opposite side below totals, and describe this as figure brought down

Question 3

what is a trial balance

Answer 3

drawn up by taking the balance brought down on each of the nominal ledge accounts and placing them into a list

list is divided into debit and credit