Special Features of Trial Balance Homework Answers

The process of accounting is a systematic process inter-linked with various entries and their numerical representation. The starting point of transaction is the journal entries which go through a robust mechanism and ends up in income statement generation and balance sheet. A trial balance is an exhaustive list of balances made during ledger postings from journal entries. We will discuss some special features of trial balance homework answers.
The ledger posting carries debit balance on the left side and credit balance on the right side. Debit and credit balances are an integral part of accounting process. Earlier, accountants used voluminous log books to record every transaction, and it was a tedious process. ERP software and various other basic accounting software has replaced those books for good.
Special features of trial balance homework answers

  • The trial balance is associated with a particular date. In accounting terminology, we use ‘as on date’ to prepare trail balance.
  • Trial balance is the exhaustive list of all ledger postings.
  • Cash account finds a mention in trial
  • Trial balance is a statement and not an account or record of transactions however closely based on record of transactions.
  • Trial balance is presented in a tabular form.
  • A total of the debit and credit maintained in the trial balance after totaling all the data must be equal.
  • A single mismatch in equality between the debit and credit balances implies error in the double entry accounting system.
  • The error is either a result of wrong entry or not following the thumb-rule of ledger postings.
  • On the other hand, equality of debit and credit does not necessarily imply the books are error-free.
  • The trial balance is prepared by accountant at the end of financial year.

Now that we have understood the special features of trial balance homework answers, we need to broaden the view to identify the purpose of trial balance.
Why the preparation of trial balance is significant and why can’t we move ahead to directly prepare P&L statement or balance sheet?
The next section reveals the answers to the proposed queries.

  • Trial balance takes into cognizance the closing balance without paying heed to stock closing balance.
  • A consolidated trial balance is a must to assess the accuracy of ledger postings.
  • The debit and credit balance should be equal in a trial balance statement; this is a reality only when the ledger postings have followed correct assumptions and thumb rule of accounting.
  • Trial balance makes it simpler for accountants to detect numerical accuracy.
  • It is a test of arithmetical accuracy. The debit and credit tallying are itself a proof of numerical accuracy, however, there can still be some issue with double entry system.
  • Trial balance statement forms the basis of preparing balance sheet and P&L statement. We evaluate the trend of income generation in business in terms of asset and liabilities through trial balance.

In this context, it becomes mandatory to mention; a trial balance is not a part of double entry system. It simply reflects the accuracy of working on the double entry system.
Some alternative points of special features of trial balance homework answers
Compensating errors do not reflect on the trial balance statement. For example, if both compensating entries in a ledger are posted wrong, the double entry system will not throw up any error. The debit and credit side will tally in the trial balance sheet, and you won’t know if there is any wrong posting in the ledger.
To make special features of trial balance homework answers look simple enough we present an illustration.
ABC trading co
Unadjusted trial balance
December 31, 2016
Account title                                                                                 Debit($)           Credit($)
Cash                                                                                              7480
Accounts receivable                                                                     3400
Service and supplies                                                                      1500
Furniture and fixture                                                                    3000
Service equipment                                                                        16000
Accounts payable                                                                                                  9000
Loans payable                                                                                                       12000
Capital                                                                                                                   13200
Drawing                                                                                        7000
Service revenue                                                                                                    9550
Rent expense                                                                                1500
Salaries expense                                                                           3500
Taxes and licenses                                                                        370
 
$43750            $43750
In the unadjusted trial balance statement, we find the debit and credit balance tallying with each other.
At the end of the financial accounting year, some adjustments were made as follows as on December 31, 2016
Accounts receivable                                                         300
Service revenue                                                                      300
Utilities expense                                                                1800
Utilities payable                                                                      1800
Service supplies expense                                                  900
Service supplies                                                                       900
Depreciation expense                                                       720
Accumulated depreciation                                                     720
 
The adjustments will lead to change in the trial balance statement.
Accounts receivable is debited which will increase by $300, and service revenue is credited to the tune of $300. The balance of accounts receivable is raised by $3700 which leads to $3400 unadjusted balance + $300 adjustment.
Service revenue will now increase to $9850 from unadjusted balance of $9550.
There is no impact due to utility expense and payable.
In the next section of service supplies, the expense pertaining to service supplies is debited for $900. On the other hand, service supply is credited for $900. Service supply has a debit balance of $1500. Incorporating the $900 credit balance, adjustment now stands at $600 debit.
Owing to the adjustment entry, depreciation expense will have a balance of $720.
The adjusted trial balance is posted below post incorporating the above changes
ABC Trading co
Adjusted trial balance statement
December 31,2016
 
Account title                                                                                 Debit($)           Credit($)
Cash                                                                                              7480
Accounts receivable                                                                      3700
Service supplies                                                                             600
Furniture and Fixtures                                                                  3000
Service equipment                                                                        16000
Accumulated depreciation                                                                                   720
Accounts payable                                                                                                  9000
Utilities payable                                                                                                    1800
Loans payable                                                                                                       12000
Capital                                                                                                                   13200
Drawing                                                                                        7000
Service revenue                                                                                                    9850
Rent expense                                                                                1500
Salaries expense                                                                           3500
Taxes and licenses                                                                        370
Utilities expense                                                                            1800
Service supplies expense                                                              900
Depreciation expense                                                                   720
Total                                                                                              $46570            $46570
 
Numerical analysis forms the backbone of any special features of trial balance homework answers.


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