Chapter 11: The Initial Trial Balance

Question 1

How is an initial trial balance prepared?

Answer 1

An initial trial balance is prepared by

Taking the balances brought down of each account in the ledger

And setting them out in Debit & Credit Columns.

Question 2

What do Debit balances include accounts for?

Answer 2

Debit balances include accounts for:

• Purchases
• Sales Returns
• Fixed Assets
• Inventory
• Expenses
• Sales ledger control

-Petty Cash control

Question 3

What do Credit balances include accounts for?

Answer 3

Credit Balances include accounts for:

• Sales
• Purchases Returns
• Income
• Capital
• Loan
• Purchases ledger control

Question 4

What can the balances of bank control & VAT accounts be either?

Answer 4

Debit / Credit

Depending on the circumstances.

Question 5

What should be the same for the initial trial balance?

Answer 5

The totals of the columns for debit & credit balances should be the same.

Question 6

The initial trial balance checks what?

Answer 6

The arithmetical accuracy of the double-entry book keeping.

ie. That the debit entries equal the credit entries.

Question 7

If the initial trial balance fails to balance, where could the error be?

Answer 7

Either in the addition of the trial-balance

and/or in the double entry book-keeping.

Question 8

What should be done with errors?

Answer 8

Any error must be traced and corrected.