The trial balance

Question 1

What is used to prepare a trial balance?

Answer 1

The trial balance is prepared using the final balances from each of the ledger accounts eg Sales Revenue, Motor vehicles, advertising etc.

Question 2

What are the two purposes of a trial balance?

Answer 2

To check the arithmetic accuracy of our ledger accounts. It checks to see that our Debit entries match our credit entries. The total of the debit column in the trial balance must match the total of the credit column.

The information included in the trial balance is used to prepare the financial statements eg income statement and statement of financial position.

Question 3

When is a trial balance usually prepared?

Answer 3

The trial balance is usually prepared at the end of the financial year and will always have the heading:

Trial balance for (name of business) as at (day, month and year)