Bookkeeping & Principles
Trial Balances
Ensuring debits equal credits on a worksheet.
Questions present simplified account lists with balances, ask for document identification, or require placing given balances into the correct column. Traps include accounts with contra-balances and arithmetic errors that create false equality.
What the exam tests
Definition-to-Term Identification
A description is given (e.g., 'worksheet showing all account balances where credits equal debits'); identify the correct document name.
Conceptual Discrimination
Distinguish a Trial Balance from other financial statements. The Trial Balance balances account totals; a Cash Flow Statement tracks operating/investing/financing activities.
Worksheet Construction
List account balances correctly in debit and credit columns and verify the two columns sum to equal totals.
Adjustment Analysis
Work with an Adjusted Trial Balance: account balances after adjusting entries have been posted to close the books at period end.
Structural Recognition
Key rules
- ›A Trial Balance lists every general ledger account and its ending balance in either the Debit or Credit column.
- ›It is a preliminary step, prepared before final financial statements to confirm the books are in balance.
- ›If Debit total ≠ Credit total, a posting error exists and must be found before continuing.
Common traps
- !Confusing the Trial Balance with the Balance Sheet. They are different documents with different purposes.
Analytical Discrimination (Debit vs. Credit Normal Balances)
Key rules
- ›Normal Debit balances: Assets, Expenses, Dividends.
- ›Normal Credit balances: Liabilities, Equity, Revenue.
- ›An account with the opposite-of-normal balance is a red flag for a posting error.
Common traps
- !Placing a liability account in the Debit column because cash was paid. The account's normal balance is Credit.
Arithmetical Accuracy
Key rules
- ›Sum the Debit column and the Credit column independently, then compare.
- ›Re-add if they don't match. Do not assume an error before double-checking arithmetic.
Common traps
- !Carrying a column total forward without re-verifying the addition.
Interpretive Data Extraction
Key rules
- ›Read the General Ledger or Chart of Accounts to find each account's ending balance before entering it.
- ›Use the account's running balance (not individual transactions) as the Trial Balance entry.
Try one
What worksheet shows the account balance where credits equal debits?
A Trial Balance is a worksheet listing every general ledger account's ending balance in the Debit or Credit column, prepared to confirm that total debits equal total credits before final statements are drawn up.
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