Trial Balance

Question 1

Balancing an account (5 steps)

Answer 1

1. Add up debits and credits on an account
2. If one side is greater than the other, insert a ‘balancing’ figure on the lower side
3. Balancing figure called balance carried forward (c/f) or carried down (c/d)
4. Enter total figures on both columns
5. The c/f figure becomes the b/f figure for the next period. Enter this below the total
   on the opposite side

Question 2

The Trial Balance

A list of Dr and Cr balances taken from the nominal / general ledger.
What is the purpose of this? (3)

Answer 2

• Check to ensure Dr = Cr
• Errors can still exist even if Dr = Cr
• Useful stage in the preparation of final
  accounts

Question 3

Why could the trial balance not balance?

Book-keeping errors such as: (5)

Answer 3

• Only a Dr or Cr side of a transaction may be posted with
  the other half being omitted.
• A Dr or Cr entry may be made on the wrong side of the ‘T’
  account
• Different amounts may be posted to the Dr and Cr sides
  (eg transposition errors)
• The ‘T’ account may be added up incorrectly and an
  incorrect balance transferred to the trial balance
• A Dr balance is entered onto the trial balance as a Cr
  balance or vice versa

Question 4

Suspense account

If such an error has occurred, the trial balance will not balance so…

On preparing the year end accounts…

Answer 4

If such an error has occurred, the trial balance will not balance so…

• We make it balance by creating a suspense account

On preparing the year end accounts…

• the errors must be found and removed