What is a Trial Balance?
Written by Eddy Hood
Keeping track of profits and losses, issuing invoices, figuring out taxes, and paying bills are a just a sampling of the responsibilities of a small business owner. At Ignite Spot, we are experts at handling an array of accounting tasks for small to medium-sized businesses. Company owners who leave the accounting work to our knowledgeable staff have more time to focus on expanding their businesses and increasing profits. One of the most basic bookkeeping tasks we perform is to prepare a trial balance sheet for a business. Take a look at some information that answers the question: What is a trial balance? Plus, discover the purpose of creating a trial balance sheet and its role in maintaining accurate financial records and reporting.
What is a Trial Balance?
An accountant starts out by creating a list that includes all of the accounts of a business. Accounts payable, supplies, accounts receivable, revenue, equipment, and cash would all be included on the list. This list has two columns. One of the columns is for debits and the other is for credits. A trial balance would be put down for each of the accounts in either the debit or the credit column. For instance, an accountant may write a trial balance of $700.00 for accounts receivable in the debit column. The trial balance is the total amount of money in an account on a specified date. After entering all of the numbers for all of the accounts, the debit column should equal the credit column. If these two columns are not equal, the accountant knows there is an inaccuracy that needs to be found and corrected.
What is the Purpose of Creating a Trial Balance?
Creating a trial balance sheet and making sure the debit and credit columns are equal are two necessary steps toward drafting an accurate financial statement. If there are inaccuracies in a business' financial records, they will be revealed on the trial balance sheet. These inaccuracies can be corrected before the information is transferred to a financial statement. The experienced professionals who work in our online accounting firm know how to find and correct a variety of accounting mistakes on a trial balance sheet. Business owners can depend on the thorough work of our accountants at Ignite Spot.
What is a Working Trial Balance?
A working trial balance is when adjustments are being made to numbers on a trial balance sheet. At this point in the bookkeeping process, the trial balance sheet is still a work in progress. The adjusted trial balance is exactly what it sounds like; it is the updated balance sheet after necessary adjustments have been made to account totals. An adjusted trial balance sheet usually includes accounts that were not on the original trial balance sheet. Financial statements are created using the data on an adjusted trial balance sheet.
Finally, business owners who choose to have their accounting tasks outsourced to Ignite Spot can concentrate on coming up with fresh new ideas that benefit their company's bottom line. Our accountants have the education and training to offer high quality online bookkeeping. Fill out our simple form to download a price for our services and sign up with Ignite Spot today!