This time we will discuss the notion of a trial balance and its functions, form or trial balance format and also examples. The following is the explanation.
Table of contents :
Definition of Trial Balance
Trial Balance Function
Trial Balance Form / Format
Example of Trial Balance
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Definition of Trial Balance
The Trial Balance is a book that has content in the form of a list that explains the collection of balances derived from the data held by each account of the parties concerned.
The trial balance usually has several main columns that are used in carrying out the data collection process.
These columns include the balance sheet column itself, the production cost column, the estimated profit or loss size of a transaction and the purchase and sale column.
Trial balance is generally issued at the end of the period to be used as evaluation material.
This is because this balance will show the economic stability obtained through economic activities carried out during this process.
Trial Balance Function
understanding trial balance
Trial balance has a function to detect mathematical errors that occur in a multiple entry accounting system, which is accounting in pairs.
In the balance sheet, if provided and there is a total debit equal to the total credit which is clearly explained, it can be said that the trial balance is considered to be balanced
and there should be no mathematical errors found in the party accounting ledger.
However, this does not mean that there are no errors in the company’s accounting system. for example, a transaction was classified incorrectly or simply disappeared from the system,
there is still the possibility of material accounting errors that will not be detected by the trial balance procedure.
The trial balance can also be a bookkeeping worksheet where the balances of all ledgers are compiled into debit and credit columns. Companies prepare trial balances at regular intervals, usually at the end of each reporting period.
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The general purpose of producing a trial balance is to ensure that the entries in the company’s accounting system are mathematical and correct.
Trial balances are usually prepared by bookkeepers or accountants who have used their accounting diaries or diaries to record financial transactions and then post them to nominal ledgers and personal ledgers.
Trial Balance Form / Format
The simple balance sheet format / form has 4 main columns including the account code column (number), the account name column (description), the debit and credit fields as shown below:
form of trial balance format
Information :
- Column Code (number) Account
The column in the account number will be filled with the transaction account number, for example, the transaction is an account number for cash type 1.1.1.
Usually the account number is taken from the general ledger and the account number comes from each account contained in the company ledger.
The account number / code must be written systematically or sequentially starting from code 1 which indicates the Asset account code to code 4 which shows the Cost account code.
- Column Account Name
In the account name column, it must be filled in with the name of the account that you want to fill in the trial balance, usually taken from the general ledger as well as the company ledger. The writing in the trial balance is sorted from the class of asset accounts, debt accounts, capital accounts, income accounts, and the last is expense accounts.
- Column Debit
The following column contains the balance of each account that has a debit balance according to the ledger.
- Credit Column
The following column contains the balance of each account that has a total credit balance according to what is in the ledger.
Example of Trial Balance
The following is an illustration or example of a company’s trial balance.
