Understanding Bookkeeping

In the event that your trial balance doesn’t balance, go through the following bookkeeping tips/steps in the suggested order to ensure that the error can be detected soonest possible:

1. Find out the exact amount of your error: by how much are you out of balance?
2. Is the error $10,$100 or $1,000? You probably failed to carry when adding or to borrow when subtracting or you may have made a slide error in posting. (more…)

A Trial Balance that balances DOES not necessarily prove that all the transactions have been recorded or that the accounting process is error-free.

Numerous errors or mistakes can exist even though the trial balance totals are in agreement. This can be categorized in two parts namely:

• Errors that CAN BE REVEALED by the Trial Balance and (Part1)

• Errors that CANNOT BE REVEALED by the Trial Balance(Part2)

(more…)

A Trial Balance that balances DOES not necessarily prove that all the transactions have been recorded or that the accounting process is error-free.

Numerous errors or mistakes can exist even though the trial balance totals are in agreement. This can be categorized in two parts namely:

• Errors that CAN BE REVEALED by the Trial Balance and (Part1)

(more…)

The following are the steps taken in preparing a Trial Balance;

• Determine the balance of each account in the ledger and Cash Book;
• List the account title and their balances; (more…)

A Trial Balance is a list of debit and credit balances extracted from the accounts in the ledger at a particular date.

• An account has a debit balance when its debit total exceeds its credit total
• Assets, expenses and drawings accounts have debit balance. (more…)

As earlier explained, first the recording of all the individual business transactions into the journal and then post into ledgers accounts vide the chart of accounts. The final output is then the trial balance which is explained in details:- (more…)