3.3 Preparing trial balances

• What is the purpose of a trial balance?

  Mathematical accuracy, error identification
• List the three main purposes of a trial balance in the correct order.

  1️⃣ Verification of mathematical accuracy

  2️⃣ Identification of errors

  3️⃣ Foundation for financial statements
• The account names in a trial balance list all the accounts in the accounting system
• A trial balance ensures the accounting equation (Assets = Liabilities + Equity) balances.
• Inventory is an example of an asset account in a trial balance.
• List the steps to enter account balances into a trial balance.

  1️⃣ Identify each account balance

  2️⃣ Enter debit and credit balances

  3️⃣ Calculate total debits and credits

  4️⃣ Ensure debit and credit balance equality
• What accounting equation does a trial balance reflect?

  Assets = Liabilities + Equity
• A trial balance serves as a starting point for preparing the Income Statement and Balance Sheet.


  True
• One key component of a trial balance is the list of all accounts used in the general ledger
• Why are accounts grouped into categories in a trial balance?

  Balance accounting equation
• Steps to enter account balances into a trial balance:

  1️⃣ Identify each account balance

  2️⃣ Enter balances into debit or credit columns

  3️⃣ Organize accounts by category

  4️⃣ Calculate total debits and credits

  5️⃣ Verify that debits equal credits
• What is the first step to identify and correct errors in a trial balance?

  Re-total columns
• A trial balance lists all debit and credit account balances
• A trial balance can identify all types of accounting errors.

  False
• Total debits must equal total credits in a trial balance to ensure balance.


  True
• Group the following accounts into their correct categories for a trial balance: Cash, Accounts Payable, Sales, Rent Expense, Share Capital.

  1️⃣ Assets: Cash

  2️⃣ Liabilities: Accounts Payable

  3️⃣ Equity: Share Capital

  4️⃣ Income: Sales

  5️⃣ Expenses: Rent Expense
• Accounts in a trial balance are always listed alphabetically.

  False
• Mathematical accuracy in a trial balance reflects the accounting equation (Assets = Liabilities + Equity).
• A trial balance helps identify errors such as transposition or omission in the ledger
• What is the primary purpose of a trial balance in accounting?

  Verify accuracy
• Match the category with an example:

  Assets ↔️ Cash

  Liabilities ↔️ Accounts Payable

  Equity ↔️ Retained Earnings

  Income ↔️ Sales Revenue

  Expenses ↔️ Salaries Expense
• When entering balances into a trial balance, debit balances are placed in the debit column and credit balances in the credit column
• The total debits in a trial balance must equal the total credits to ensure the accounting equation balances.


  True
• When correcting errors in a trial balance, you should compare each account balance with the general ledger