Accounting and Finance Foundations

Unit 6

Accounting and Finance Foundations Unit 6: Journalizing 496

After preparing and posting the correcting and adjusting journal entries to the general ledger,

you should prepare the trial balance, which is, as you’ll recall, a tally of the debit and credit

balances in the general ledger at the end of the accounting period. The trial balance should

include only the accounts from the general ledger that have balances. Although the trial

balance is a working document and not a financial statement, it is still a very important tool.

Accountants use the trial balance to analyze and review the different account balances and

identify any abnormalities that exist.

When analyzing and reviewing the trial balance, make sure that you:

• Check the balances. If the general ledger balances are carrying an abnormal balance
  (that is, if you find that the ending balance is not the normal balance), or if the ending
  balances are higher or lower than normal, this may be an indication that there is an error
  in the accounts somewhere.


• Look for duplicate entries. If you are showing a difference that is divisible by 2, an entry
  was probably entered twice.


• Investigate transposed numbers. If there is a difference in the ending balances—and
  especially if the difference is divisible by 9 –there may be a transposition error somewhere.
  You or a coworker may have switched two digits when entering a transaction.


• Review source documents. If something simply does not look right, trace the transactions
  back to the source documents.

Journalizing

Chapter 6

Lesson 17.3 Preparing the Trial Balance

Student Guide

Chapter 17