BUSINESS STUDIES 8- 9

TOPIC : TRIAL BALANCE

PRESENTED BY:
NAME : SIMUNTALA JOHN
SCHOOL : MISHISHI DAY SECONDARY
DISTRICT/PROVINCE: CHINSALI / MUCHINGA PROVINCE
COUNTRY : ZAMBIA
CONTACT : +260974298133 / +260968759966
EMAIL : [email protected]

CONTACT : +260974298133 / +260968759966 Email: [email protected]

 LESSON OUTCOMES

 Define a Trial balance

 Explain the purpose of the trial balance
 Rules of the trial balance
 Prepare a trial balance

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 PURPOSE OF THE TRIAL BALANCE

 What is a Trial balance

• A trial balance is defined as a list of balances extracted from the ledger accounts arranged under debit and credit
columns which when added the totals must be equal.

PURPOSE OF THE TRIAL BALANCE

 The purpose of the trial balance is:
 To check the arithmetic accuracy or errors from the ledger.
 To check whether the double entry has been completed.
 To act as a quick source of information for account balances.
 To summarize ledger account information.
 To provide a basis for the preparation of final accounts
 By virtue of the principle of double entry book-keeping, the totals of debit and credit balances must
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agree. Should this not be the case, then there must be an error in the books of account.
 EXTRACTING A TRIAL BALANCE

 In extracting a trial balance, a number of steps are followed. The following

are the steps.
 The account balances are grouped according to whether they are debits or credits.
 All debit balances are listed on the left hand side and all credit balances are listed on the right hand side of the
trial balance.
 All account balances in each column are then added to find the totals, which should be equal.
 The totals are underlined.
 In order to group the account balances accordingly, one needs to understand the rules of debits and
credits.

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 RULES OF THE TRIAL BALANCE

The ALEG principle:- MEANING

A L E G Assets Liabilities Expenses Gains

Dr Cr Dr Cr

DEBIT – ALL ASSETS AND EXPENSES

CREDIT- ALL INCOMES AND LIABILITIES
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 EXAMPLE
J. Mulenga Traders had the following
Rent 4000
balances as at 31 January 2021. Returns outwards
200
Debtors 30000
K
Discount received 7000
Banking 4600 Wages & salaries
Creditors 7000
14000 Capital 76300
Drawings 14000 Motor vehicle
Stock 29000
10000 Stationery 1500
Sales 55500
You are required to extract a trial
Discount allowed
balance as at 31 January 2021.
1400
Sales returns 4500
purchases
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 Trial balance as at 31 January 2021.
Details DR (K) CR (K)
Bank 4600
Drawings 14000
55500
Sales
4500
SOLUTION Sales returns
Cash
2000
4000
Rent
30000
Debtors 14000
Creditors 7000
Discount received 10000
Stock 1400
Discount allowed 45000
200
Purchases
7000
Returns outwards
76300
Wages & salaries
29000
Capital
1500
Motor vehicle
Stationery
 

153000 153000
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[email protected]  
 LESSON ACTIVITY
The following trial balance was extracted by Banda on 31 December, 2021, failed to balance.

Trial balance as at 31 December, 2017

DETAILS DR (K) CR (K)
Sales 150140  
Machinery   74800
Debtors 15200  
creditors 8500  
Rent and rates   2100
Carriages outwards   3500
You are required to correct the trial
purchases   90500 balance prepared by Banda on 31
December 2021.
Capital   25000
Bank overdraft 2460  
  176300 195900

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 SUMMARY

 A trial balance is defined as a list of balances extracted from the ledger accounts arranged
under debit and credit columns which when added the totals must be equal.
 The purpose of a trial balance is:
• To check the arithmetic accuracy or errors from the ledger.
• To check whether the double entry has been completed.
• Facilitate the preparation of final accounts

 Rules of the trial balance

• DEBIT – ALL ASSETS and EXPENSES
• CREDIT- ALL INCOMES and LIABILITIES

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 In the next lesson, we will learn Final Account. 

THANKS YOU

STAY HOME. STAY SAFE

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