Trial balance is an accounting reporting in which balance of all accounting categories are calculated into debit and credit column totals. A correct trial balance should equal the credit and debit, if it doesn’t there are errors in the accounting transactions. Business usually prepare trial balance report at end of every reporting periods like monthly.
How to prepare trial balance report
A trial balance is a point in time report, meaning it is only valid for the specific time on which the report is prepared. It can be prepared for a specific time, but not over a period time. For example. You can prepare a trial balance as of Dec 31st but you cannot prepare it for the last year.
Once report time point is identified, it is important to gather all the balances of every account or categories in your accounting system. Usually assets, expense categories will have debit balance and liability, equity and income categories will have a credit balance. Usually trial balance will have 3 columns. Account or categories name followed by debit and credit column.
Trial balance should always zero out, sum of debits of all accounts must equal the sum of credit of all accounts. If the report doesn’t zero out, then there is mathematical or transactions errors for any of the accounting categories. Accountants usually run trial balance report to check for consistency of the accounting books.
Modern accounting software like QuickBooks, myBooks has the ability to generate trial balance with a click of a button for any point in time. Additionally use of accounting software usually enables systematically correct transactions free of mathematical errors and hence mostly it will zero-out making the sure the accounting system free of mathematical errors.
Sample Trial Balance Report
|Trial Balance Report|
|Petty Cash||1020||$ 4,421.77||$ –|
|Accounts Receivable||1200||$ 6,767.65||$ –|
|Furniture & Equipments||1730||$ 500.00||$ –|
|Accounts Payable||2000||$ 822.00||$ –|
|Sales Tax Payable||2240||$ –||$ 648.75|
|Owners Equity||3150||$ –||$ 4,000.00|
|Artists Income Coloring||4010||$ –||$ 3,675.15|
|Artists Income Edting||4020||$ –||$ 3,350.00|
|Artists Inc. Fine art comm.||4030||$ –||$ 6,250.00|
|Advertising||6000||$ 38.00||$ –|
|Auto and Truck Expenses||6010||$ 28.50||$ –|
|Bank Fees||6020||$ 9.50||$ –|
|Business Licenses||6025||$ 71.25||$ –|
|Computer and Internet||6030||$ 57.00||$ –|
|Contract Labor||6035||$ 57.00||$ –|
|Dues & Subscriptions||6045||$ 37.98||$ –|
|Insurance||6050||$ 285.00||$ –|
|Meals and Entertainment||6060||$ 76.00||$ –|
|Office Supplies||6065||$ 11.40||$ –|
|Payroll Expenses||6100||$ 19.00||$ –|
|Officers Compensation||6133||$ 14.25||$ –|
|Postage & Shipping||6200||$ 28.50||$ –|
|Printing||6210||$ 9.50||$ –|
|Professional Fees||6220||$ 95.00||$ –|
|Rent||6240||$ 1,026.00||$ –|
|Repairs & Maintenance||6250||$ 28.50||$ –|
|Security||6260||$ 45.60||$ –|
|Telephone||6280||$ 48.45||$ –|
|Travel||6290||$ 14.25||$ –|
|Utilities||6300||$ 684.00||$ –|
|Income Tax Expense||6310||$ 24.70||$ –|
|Purchase Taxes||6785||$ 265.10||$ –|
|Utilies||6990||$ 228.00||$ –|