If you are following double entry accounting then, you should be aware that in Book Keeping, for every credit, there should be an equal debit amount. This means that, in bookkeeping all debits should equal all credits. But, if both sides are not equal then, it can be assumed that, an error has been made somewhere, in the accounting process. How can you find out or detect such errors in accounting system? In order to locate the specific error in accounting, you need to draw up a Trial Balance, which records all debit and credit entries of the ledger.
Thus, Trial balance can be defined as recording of net ledger balances in debit and credit column in the bookkeeping worksheet to find any mathematical error or discrepancies in debit and credit transfer into their respective accounts. The trial balance can be prepared quarterly, half yearly or yearly. But, common practice is to prepare Trial Balance at the end of every accounting period. The main purpose of preparing such financial statement is to check, if all entries recorded into company’s bookkeeping are recorded mathematically correct.
Though, Trial balance is prepared for the correctness of debit and credit entries transfer into ledger accounts, it can be said that, it is not full proof for detecting errors because, if a transaction is missing completely or classified improperly in different head or a debit and credit could have been transposed then, such errors can not be detected in this Bookkeeping Spread Sheet.
Some of the most common errors can be classified as follows:
If you think an error has been made then, you can isolate such error by working backward from Trial Balance entry to journal entry.
Below given Trial Balance Worksheet template can help you in drawing up your own Bookkeeping Spreading Worksheet:
|
Trial Balance Worksheet |
|||
|
[Mm___ Dd____ 20XX] |
|||
|
|
|
|
|
|
|
|
General Ledger |
|
|
|
|
Account Balance |
|
|
Account Name |
Debit |
|
Credit |
|
|
|
|
|
|
Petty cash |
$0.00 |
|
|
|
Cash in checking |
$0.00 |
|
|
|
Cash in savings |
$0.00 |
|
|
|
Accounts receivable |
$0.00 |
|
|
|
Reserve for bad debts |
|
|
$0.00 |
|
Inventory |
$0.00 |
|
|
|
Prepaid insurance |
$0.00 |
|
|
|
Prepaid other expenses |
$0.00 |
|
|
|
Office supplies |
$0.00 |
|
|
|
Utility deposits |
$0.00 |
|
|
|
Notes receivable |
$0.00 |
|
|
|
Investments |
$0.00 |
|
|
|
Organization expense |
$0.00 |
|
|
|
Vehicles |
$0.00 |
|
|
|
Accumulated depreciation – vehicles |
|
|
$0.00 |
|
Furniture and fixtures |
$0.00 |
|
|
|
Accumulated depreciation – furniture and fixtures |
|
|
$0.00 |
|
Equipment |
$0.00 |
|
|
|
Accumulated depreciation – equipment |
|
|
$0.00 |
|
Buildings |
$0.00 |
|
|
|
Accumulated depreciation – buildings |
|
|
$0.00 |
|
Land |
$0.00 |
|
|
|
Goodwill |
$0.00 |
|
|
|
Other intangible assets |
$0.00 |
|
|
|
Accounts payable |
|
|
$0.00 |
|
Sales tax payable |
|
|
$0.00 |
|
Federal withholding taxes payable |
|
|
$0.00 |
|
FICA taxes payable |
|
|
$0.00 |
|
State withholding taxes payable |
|
|
$0.00 |
|
Unemployment taxes payable |
|
|
$0.00 |
|
Accrued wages |
|
|
$0.00 |
|
Unearned revenue |
|
|
$0.00 |
|
Accrued income taxes |
|
|
$0.00 |
|
Credit card payable |
|
|
$0.00 |
|
Bank loan payable |
|
|
$0.00 |
|
Notes payable |
|
|
$0.00 |
|
Owner’s equity |
|
|
$0.00 |
|
Owner’s drawing account |
$0.00 |
|
|
|
Common stock |
|
|
$0.00 |
|
Additional paid-in capital |
|
|
$0.00 |
|
Preferred stock |
|
|
$0.00 |
|
Retained earnings |
|
|
$0.00 |
|
Sales |
|
|
$0.00 |
|
Revenues |
|
|
$0.00 |
|
Sales returns and allowances |
$0.00 |
|
|
|
Investment income |
|
|
$0.00 |
|
Gain (loss) on sale of assets |
$0.00 |
|
$0.00 |
|
Purchases |
$0.00 |
|
|
|
Freight |
$0.00 |
|
|
|
Purchase returns and allowances |
|
|
$0.00 |
|
Cost of goods sold – materials |
$0.00 |
|
|
|
Cost of goods sold – labor |
$0.00 |
|
|
|
Cost of goods sold – direct expenses |
$0.00 |
|
|
|
Cost of goods sold – indirect expenses |
$0.00 |
|
|
|
Advertising |
$0.00 |
|
|
|
Amortization |
$0.00 |
|
|
|
Bad debt expense |
$0.00 |
|
|
|
Bank charges |
$0.00 |
|
|
|
Charitable contributions |
$0.00 |
|
|
|
Commissions expense |
$0.00 |
|
|
|
Contract labor |
$0.00 |
|
|
|
Credit card fees expense |
$0.00 |
|
|
|
Delivery expense |
$0.00 |
|
|
|
Depreciation |
$0.00 |
|
|
|
Dues and subscriptions |
$0.00 |
|
|
|
Entertainment |
$0.00 |
|
|
|
Insurance |
$0.00 |
|
|
|
Interest expense |
$0.00 |
|
|
|
Maintenance |
$0.00 |
|
|
|
Miscellaneous |
$0.00 |
|
|
|
Office expense |
$0.00 |
|
|
|
Operating supplies |
$0.00 |
|
|
|
Payroll taxes |
$0.00 |
|
|
|
Permits and licenses |
$0.00 |
|
|
|
Postage |
$0.00 |
|
|
|
Professional fees |
$0.00 |
|
|
|
Property taxes |
$0.00 |
|
|
|
Rent |
$0.00 |
|
|
|
Repairs |
$0.00 |
|
|
|
Telephone |
$0.00 |
|
|
|
Travel |
$0.00 |
|
|
|
Utilities |
$0.00 |
|
|
|
Vehicle expenses |
$0.00 |
|
|
|
Wages |
$0.00 |
|
|
|
Income taxes |
$0.00 |
|
|
|
|
|
|
|
|
Totals |
$0.00 |
|
$0.00 |
|
|
|
|
|
|
|
|
|
|
|
Difference |
|
|
$0.00 |