Chapter 5: Trial Balance

1. Correction of errors

1.1. Types

1.1.1. Errors of transposition

1.1.2. Errors of omission

1.1.3. Errors of principle

1.1.4. Errors of commission

1.1.5. Errors of original entry

1.1.6. Compensating errors

1.2. Suspense account

2. Control account and reconciliation

2.1. Control accounts

2.1.1. Keep a total record of a number of individual items. It is an impersonal account which is part of the double entry system.

2.2. Reconciliation

2.2.1. A bank reconciliation is a comparison of a bank statement with the cash book.

3. Preparing trial balance

3.1. Purpose

3.1.1. List of ledger balances shown in debit and credit columns

3.1.2. Use to test the accuracy of the double entry accounting record

3.1.3. List the balances on ledger account

3.1.4. Total debits = total credits

3.2. Extract ledger balance to trial balance

3.2.1. Step 1: Collection of ledger accounts

3.2.2. Step 2: Balancing ledger accounts

3.2.3. Step 3: Collecting the balances

3.3. Preparing adjusted trial balance