The Trial Balance (Cambridge (CIE) A Level Accounting): Revision Note
Exam code: 9706
Preparing a trial balance
How do I prepare a trial balance?
You will likely be given a list of accounts and balances
STEP 1
Identify whether each account should have a debit or a credit balanceThe table below gives a summary of the different accounts
STEP 2
Check that the total of the debits is equal to the total of the creditsSTEP 3
Write each account in the trial balance and put the balance in the correct columnSTEP 4
Total each column
Accounts with debit balances | Accounts with credit balances |
Purchases | Purchases returns (returns outwards) |
Sales returns (returns inwards) | Sales (revenue) |
Other expenses (rent paid, discount allowed, carriage inwards, carriage outwards, etc) | Other income (rent received, discount received, etc) |
Trade receivables | Trade payables |
Bank | Bank overdraft |
Other assets (Including inventory, vehicles, machinery, etc) | Other liabilities (Including bank loan, mortgage, etc) |
Drawings | Capital |
Provision for depreciation | |
Allowance for irrecoverable debts |
Examiner Tips and Tricks
Check the totals agree before you write any accounts in the trial balance. This will help you spot any mistakes before you write anything in the trial balance.
How do I amend a trial balance?
You could be given a trial balance which contains errors
The balances could also be in the wrong columns
STEP 1
Correct the errors to find the correct balances for each accountSTEP 2
Double-check whether each account has been correctly identified as a debit or a creditSTEP 3
Complete a corrected trial balanceThe totals will be equal
Worked Example
Dimitri is a sole trader. He has prepared a trial balance on 31 March 2024. However, it contains errors.
Dimitri
Trial Balance at 31 March 2024
Debit $ | Credit $ | |
Sales | 35 471 | |
Purchases | 17 714 | |
Purchases returns | 1 407 | |
Discount received | 1 895 | |
Rent paid | 5 321 | |
General expenses | 2 087 | |
Office equipment at cost | 20 000 | |
Provision for depreciation of office equipment | 4 580 | |
Trade receivables | 9 710 | |
Trade payables | 3 980 | |
Inventory | 7 060 | |
Bank overdraft | 450 | |
Capital at 1 April 2023 | 20 869 | |
Drawings | 8 760 | |
67 933 | 71 371 |
Dimitri has included the value of the inventory on 31 March 2024, the value of the inventory on 31 March 2023 was $2 000 lower than this value. Prepare a corrected trial balance at 31 March 2024.
Answer:
STEP 1
Correct any amountsThe value of inventory should be for 31 March 2023
$7060 - $2000 = $5060
STEP 2
Identify whether the balances should be debits or creditsThe following should have debit balances:
Purchases
Rent paid
General expenses
Office equipment at cost
Trade receivables
Inventory
Drawings
All other items should have credit balances
STEP 3
Prepare the corrected trial balance
Dimitri
Corrected Trial Balance at 31 March 2024
Debit $ | Credit $ | |
Sales | 35 471 | |
Purchases | 17 714 | |
Purchases returns | 1 407 | |
Discount received | 1 895 | |
Rent paid | 5 321 | |
General expenses | 2 087 | |
Office equipment at cost | 20 000 | |
Provision for depreciation of office equipment | 4 580 | |
Trade receivables | 9 710 | |
Trade payables | 3 980 | |
Inventory | 5 060 | |
Bank overdraft | 450 | |
Capital at 1 April 2023 | 20 869 | |
Drawings | 8 760 |
|
68 652 | 68 652 |
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