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- Format
- Subject
- Accounting, Financial Accounting
- Module
- ACC 290 · Week 2
This document discusses when the trial balance is prepared, what it tells you, and its limitations. It also explains the purpose of the adjusted trial balance. It is for ACC 290 Week 2.
What's inside
- When the trial balance is prepared
- What the trial balance tells you
- Limitations of the trial balance
- Purpose of the adjusted trial balance
- References
Who it is for: Students taking the ACC 290 course. (Undergraduate)
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Summary
A trial balance is a list of all the accounts in the general ledger. It shows the balance in each account at the end of a specific accounting period. Students learn when it is prepared and what it tells about the accounts.
Preparing the trial balance
The trial balance is prepared after the ledger accounts have been balanced. It lists debits on the left and credits on the right. Both sides must balance.
What the trial balance tells you
The trial balance shows that debits and credits match. It can also identify errors in posting and journalizing. It is a step before preparing financial statements.
Limitations of the trial balance
The trial balance does not guarantee that the ledger is correct. Transactions might be missing or incorrect. Some errors might not be realized.
The adjusted trial balance
The adjusted trial balance is prepared after adjustments are made to the general ledger. It ensures that the total debits equal the total credits.
Key terms
- General ledger
- A record of all the accounts in an organization.
- Debits
- Entries on the left side of an account.
- Credits
- Entries on the right side of an account.
- Financial statements
- Reports that show an organization's financial performance and position.
- Posting
- The process of transferring journal entries to the ledger.
- Journalizing
- The process of recording transactions in the journal.
Questions this document helps with
- What is the purpose of the trial balance?
- When should the trial balance be prepared?
- How does the adjusted trial balance differ?
Summary written with AI from the document's text.
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