Section 3Preparing a Trial Balance

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Chapter 7

Section 3 Preparing a Trial Balance

• What Youll Learn
• The purpose of a trial balance.
• How to prepare a trial balance.
• How to identify and locate trial balance errors.

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Section 3 Preparing a Trial Balance (cont'd.)
Chapter 7

Why Its Important To present accurate financial
statements, the accounts must be in balance. The
purpose of a trial balance is to prove that the
general ledger is in balance.

• Key Terms
• proving the ledger
• trial balance
• transposition error

• slide error
• correcting entry

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Section 3 Preparing a Trial Balance (cont'd.)
Chapter 7

The Fifth Step in the Accounting Cycle The Trial
Balance

• A formal way to prove that debits equal credits
  is to prepare a trial balance.
• Prepared on two-column accounting stationery.
• Account numbers are listed in the far left column.

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Section 3 Preparing a Trial Balance (cont'd.)
Chapter 7

The Fifth Step in the Accounting Cycle The Trial
Balance (cont'd.)

• Account names are listed in the next column.
• Debit balances are entered in the first amount
  column.
• Credit balances are entered in the second amount
  column.

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Section 3 Preparing a Trial Balance (cont'd.)
Chapter 7

The Fifth Step in the Accounting Cycle The Trial
Balance (cont'd.)



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Section 3 Preparing a Trial Balance (cont'd.)
Chapter 7

Check Your Understanding

What is the purpose of a trial balance?